11th Dec 2009 by Tom Lindmark
Restricted securities are either equity or debt securities that are subject to some restriction on their sale or transfer. Typically, restricted securities arise from executive compensation plans. For instance, an executive might be awarded options to purchase shares of the company for which he works or might be granted shares in the company. These shares may have caveats that prevent more than a certain amount being sold in any given year or might require registration in order to be sold. Normally, restricted securities state on their face that their sale or transfer is restricted. Any purchaser of restricted securities is thus forewarned to investigate the nature of the restriction.
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