Definition for: Letter Stock
The term "letter stock" refers to stock that has not been registered with the Securities and Exchange Commission and cannot be sold publicly in the United States. Usually, an investor has purchased such stock in a private transaction (or placement) from the issuing company. In connection with the unregistered purchase, the buyer is required to provide to the issuer an investment letter or investment representation, stating that he or she is purchasing the shares for investment purposes and not for resale in violation of the federal securities laws.
