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A letter of intent between the issuer of new securities and the buyer, in the private placement of these new securities. The letter of intent establishes that the securities are being bought for a minimum time period and are treated as an investment, not for resale. If no such letter exists, the securities must be registered with Securities and Exchange Commission.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A document that the buyer of a restricted security must file with the SEC. The investment letter states that the security is exempt from registration with SEC because the buyer does not intend to sell the security for at least two years. The investment letter helps ensure that all private placement offerings comply with applicable law, especially those concerning insider trading. If the buyer does not offer an investment letter, then he/she must register the restricted security. See also: Private placement.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A letter from the buyer of a private placement stating that the securities are for investment purposes and not for resale within two years. An investment letter is supposed to assure the SEC that the issue is not the first stage of a regular public offering subject to normal registration requirements. See also restricted security.
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.