An SEC rule stating that funds received from a penny stock offering by a blank check company must be placed in an escrow account until certain conditions have been met. A blank check company issues penny stock for business operations that have not yet begun; it effectively asks investors to trust it. Rule 419 exists in order to protect these investors from the possibility that the company is a fraud.
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An SEC rule that stipulates that funds received by a blank-check company from an issue of penny stock must be placed in an escrow account for the benefit of the purchaser.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.