Big-boy letter

The Law and Lore of Repackaging →Go uptown Repack Anatomy: Hedging exemption | Covenant to pay | Quoted Eurobond exemption | Pre-enforcement | The curious structure of an MTNIndex: Click ᐅ to expand: Repackaging Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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 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?

See also

• Qualifying institutional buyer
• Prospectus