Big-boy letter

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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 it that by law firms, who have a direct interest in it being sceptical about it, since that way they get to write you a turgid prospectus with five hundred pages of risk disclosure — 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.

The legal eagle’s perfect place is to counsel that one should have big boy letters and a five-hundred page prospectus, because that way they 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
• Offering memorandum