Big Boy Letter

Definition:

A letter, typically issued in a private sale of securities, in which the buyer acknowledges that the seller possesses Material information about the issuer. The buyer also represents that it is a sophisticated investor knowingly entering into the transaction. A Big Boy Letter is intended to prevent the buyer from suing the seller for the non-disclosure of Material information.

The effectiveness of Big Boy Letters has been the subject of litigation in the United States. It is worth noting that the SEC has stated that a Big Boy Letter will not necessarily protect a seller against any SEC enforcement for breach of Insider Trading rules.

See also Investor Representation Letter.

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