restricted security

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Restricted Security

A stock or right that one acquires through some means other than the open market. One may receive a restricted security through a merger or acquisition, private placement prior to an IPO, or sometimes through a stock option. A restricted security is not registered with the SEC and thus may not be sold publicly until registration has been made. It is less commonly called a letter security.

restricted security

A security that has not been registered with the SEC and therefore may not be sold publicly. These securities frequently enter portfolios of institutional investors through private placements and are sometimes registered at a later date. Also called letter bond, letter security, letter stock, unregistered security.

Restricted security.

Restricted securities are stocks or warrants that you acquire privately, through stock options or a corporate merger, rather than by buying them in the open market.

For example, you may receive restricted stock if you put money into a startup company.

If the company has not yet registered with the Securities and Exchange Commission (SEC) for an initial public offering (IPO), its securities cannot be transferred or resold until the issuing company meets the SEC registration requirements for publicly traded securities.

If you exercise stock options and buy stock at a reduced price, you may be required to hold those stocks for a period of time before liquidating them.

References in periodicals archive ?
Share-based payment -- IR unregistered stock compensation expense
Some creditors were especially troubled by Red Alert's inclusion of so much unregistered stock, which carried an audacious $1 billion valuation.
The transfers of unregistered stock were not made on the open market, IPG said.
Investigators say Cooley and two others lured victims into purchasing unregistered stock in Bidbay.
Pallmeyer has ruled that Tribune and Zell should be dropped from the case, but her ruling on the unregistered stock opens the door for the Labor Department to file a civil suit against GreatBanc.
New York, NY 5/9/08 -- Enzo Biochem has acquired BIOMOL International for $15 million in cash, $3 million in unregistered stock, and earn outs over two year.
Prosecutors said Tannous and three co-conspirators lured investors to buy unregistered stock in Bidbay.
Violations of Federal and state securities laws, including an illegal sale of unregistered stock, are felonies.
The transfers of the unregistered stock to Gapontsev Trust III were not made on the open market.
The $1 billion claimed value of the unregistered stock is illusory at best.
The Oregon Attorney General's Office is negotiating with Junction City American Legion Post 61 for repayment of $40,000 to 70 investors who bought unregistered stock in an illegal plan for financing the purchase of the post building 10 years ago.
5 billion shares of that company's unregistered stock, for proceeds of approximately $8.