Investment Letter

In the private placement of new securities, a letter of intent between the issuer of securities and the buyer establishing that the securities are being bought as an investment and are not for resale. This is necessary to avoid having to register the securities with the Securities and Exchange Commission. (Under provisions of SEC Rule 144, a purchaser of such securities may eventually resell them to the public if certain specific conditions are met, including a minimum holding period of at least two years.) Use of the investment letter gave rise to the terms letter stock and letter bond in referring to unregistered issues. See also Letter Security.

Agreement between the buyer and seller in a Private Placement of securities, stating that securities are being purchased for investment and will not be offered for resale to the public any time during a specified period, normally two years. Also called a letter of intent. These securities, while exempt from SEC registration requirements, may later be sold to the public under SEC Rule 144, provided the securities are held for at least two years and certain other conditions are met. Securities sold under a letter of intent are known as letter stocks or letter bonds.