restricted security(redirected from Letter Stocks)
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.