Restricted or Lettered Security – Florida Security, Investment and Business State and Federal Court Litigation and American Arbitration Association Attorney:

“Restricted” or “Lettered” Security generally describers a stock or bond that is not registered with the Securities and Exchange Commission.  Consequently, these securities cannot be sold in the public market.  When such a stock or bond is sold directly by the issuer to an investor, registration can be avoided if a letter of intent, called an investment letter is signed by the purchaser establishing, among other things, that the securities are being bought for investment purposes and not with a view to resale.

Normally, this investment letter requires the investor to acknowledge the fact that he or she has received sufficient information about the issuer to make an intelligent investment decision, understands that the investment involves varying degrees of risk (usually high risk) and that the investor realizes that he or she may loose their entire investment.  From a practical investment standpoint, these types of investments are not appropriate for the average investor.

Securities issued in these types of transactions are sold pursuant to various exemptions from registration.  These exemptions are established by various statutes, rules and regulations, which are fairly complicated.  This regulatory structure is designed to protect not only the issuer but the investor.  If the issuer has not properly followed the requirements of the exemption upon which it has relied, the investor might have the ability to seek restitution.

As with all statutory and common law claims, they are subject to statute of limitations.  Generally, the limitation provisions associated with statutory claims for securities fraud are fairly short.  If you believe that you were sold securities that were not properly registered, the reader should take immediate steps to consult with a qualified attorney.

Please keep in mind that this post is being provided for educational purposes only.  Thus, it is not designed to be complete in all material respects.  Therefore, this post should not be relied upon as legal or investment advice.  If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

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At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.