Letter stock is:
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Letter stock is a type of privately placed stock that is issued to a select group of investors, such as family members, friends, or business associates. Unlike public stock, which can be bought and sold on an exchange, letter stock cannot be immediately resold to the general public.
The term "letter stock" comes from the fact that the stock certificate itself is typically a letter-sized document that is privately issued to the investor. It may be handwritten or printed, and it represents an ownership interest in the company that issued the stock.
Letter stock is often issued by small, closely-held companies that are not yet ready to go public or do not meet the listing requirements of a stock exchange. By offering letter stock to a select group of investors, the company can raise capital without the time, expense, and regulatory requirements of a public offering.
In summary, letter stock is a type of privately placed common stock that is issued to a select group of investors and cannot be immediately resold to the general public. It is often used by small, closely-held companies to raise capital without going public.