Debt securities—10b-5 letters
Produced in partnership with Adam Farlow, Partner and Charles Farnsworth, Of Counsel of Baker McKenzie LLP
Debt securities—10b-5 letters

The following Banking & Finance guidance note Produced in partnership with Adam Farlow, Partner and Charles Farnsworth, Of Counsel of Baker McKenzie LLP provides comprehensive and up to date legal information covering:

  • Debt securities—10b-5 letters
  • US federal securities law liability and the due diligence defence
  • Contents of a 10b-5 letter
  • Impact of 10b-5 letters on non-SEC-registered securities offerings

A 10b-5 letter (also referred to as a 'disclosure letter') is a letter delivered to the underwriters by issuer's and underwriters' counsel in connection with an offering of securities in the United States pursuant to an Securities and Exchange Commission (SEC)-registered offering or a private placement pursuant to Rule 144A under the United States Securities Act of 1933 (the 'Securities Act'). The underwriters will rely on this letter as supporting evidence of their "'due diligence' investigations of the issuer in building a defence to potential liability under US federal securities laws.

The focal point of the 10b-5 letter is the prospectus used to market the securities to investors. The letter states that based on counsel's activities in connection with the securities offering, nothing came to their attention to cause them to believe that the prospectus either: (i) contains an untrue statement of a material fact or (ii) omits to state a material fact necessary in order to make the statements in the prospectus, in light of the circumstances under which the statements were made, not misleading.

US federal securities law liability and the due diligence defence

In an offering of securities in the United States, various liability and anti-fraud laws and regulations apply. Section 11 and Section 12(a)(2) of the Securities Act, which apply only to SEC-registered offerings, impose