Big-boy letter: Difference between revisions
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{{a|repack|}}A written acknowledgement from an investor that it accepts the risks of the deal and is not relying on the arranger to explain the risks and potential downsides. This works — ''may'' work: we hear some inarticulable doubt expressed about that by [[law firm]]s, who have a direct interest in being sceptical about it, since that way they get to write a turgid five-hundred page [[prospectus]] cataloguing any risk they can think of without risk — for “[[Professional client|professional]]” or “[[Qualifying institutional buyer|institutional]]” investors buying your deal but it won’t for [[retail]] investors, at least beyond the regulatory reach of the [[Securities and Exchange Commission]]. | {{a|repack|}}A written acknowledgement from an investor that it accepts the risks of the deal and is not relying on the arranger to explain the risks and potential downsides. This works — ''may'' work: we hear some inarticulable doubt expressed about that by [[law firm]]s, who have a direct interest in being sceptical about it, since that way they get to write a turgid five-hundred page [[prospectus]] cataloguing any risk they can think of without themselves ''taking'' any risk — for “[[Professional client|professional]]” or “[[Qualifying institutional buyer|institutional]]” investors buying your deal but it won’t for [[retail]] investors, at least beyond the regulatory reach of the [[Securities and Exchange Commission]]. | ||
In America, as Matt Levine is fond of saying, “everything is securities fraud”, and big boy letters may well not work. | In America, as Matt Levine is fond of saying, “everything is securities fraud”, and big boy letters may well not work. (But [[you would say that]], [[legal eagles]]...) | ||
The legal | The [[legal eagle]]’s perfect place is to counsel her clients — also legal eagles, remember, so well-minded to take such advice — that the firm should have big-boy letters ''and'' a five-hundred page [[prospectus]], because that way the lawyers get to charge you £1,500 per hour for wasting trees while taking no actual risk — because, big-boy letter, you know? | ||
{{sa}} | {{sa}} | ||
*[[Qualifying institutional buyer]] | *[[Qualifying institutional buyer]] | ||
*[[Prospectus]] | *[[Prospectus]] | ||
Latest revision as of 14:42, 12 November 2022
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The Law and Lore of Repackaging
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A written acknowledgement from an investor that it accepts the risks of the deal and is not relying on the arranger to explain the risks and potential downsides. This works — may work: we hear some inarticulable doubt expressed about that by law firms, who have a direct interest in being sceptical about it, since that way they get to write a turgid five-hundred page prospectus cataloguing any risk they can think of without themselves taking any risk — for “professional” or “institutional” investors buying your deal but it won’t for retail investors, at least beyond the regulatory reach of the Securities and Exchange Commission.
In America, as Matt Levine is fond of saying, “everything is securities fraud”, and big boy letters may well not work. (But you would say that, legal eagles...)
The legal eagle’s perfect place is to counsel her clients — also legal eagles, remember, so well-minded to take such advice — that the firm should have big-boy letters and a five-hundred page prospectus, because that way the lawyers get to charge you £1,500 per hour for wasting trees while taking no actual risk — because, big-boy letter, you know?