Mirabile Dictu! “Common Stock Does not Constitute an Investment in ‘Stock’”

Anyone who has picked up a prospectus or a private placement memorandum has undoubtedly seen, if not read, various legends and other warnings. Recently, I came across the following legend in an offering document:

Common stock does not constitute an investment in “stock” in the common sense of the term. Purchasers should not purchase common stock with the purpose of making a profit. Particularity in light of the transfer restrictions and redemption rights of the corporation described in this offering document, it is virtually impossible for anyone to realize a profit on a purchase of common stock or even to recoup the amount initially paid to acquire such common stock.

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Published In: Business Organization Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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