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A loan is nothing like a sale because you still take on all the asset risk. At most, a non recourse loan gives a slight hedge which isn't selling either. (You d
by usaar333 8y ago
A loan is nothing like a sale because you still take on all the asset risk. At most, a non recourse loan gives a slight hedge which isn't selling either. (You don't realize capital gains when you take loans or hedge a security)
Some market standoff agreements might prohibit using stock as collateral, but plenty don't. I chatted with an ibank willing to lend me money against locked out shares to buy a home with.
- jaggederest 8y agoAt least when I was in that situation, people were absolutely willing to loan me money, but I consulted a securities lawyer and they said the terms of the lockup agreement prohibited any loan against the value, hedge, agreement to sell, collateralizing, or anything that might in any way look like a sale or attempt to offset the risk, full stop. So yes, ibanks will loan you money, because they don't care if you violate the lockup agreement. This should probably not be surprising, and it's buyer beware if you do.
- usaar333 8y agoHow was your lockup agreement phrased? If it's something like this one (https://blog.wealthfront.com/post-ipo-dilemma-hedging-stock/ https://blog.wealthfront.com/post-ipo-dilemma-hedging-stock/), where you have clauses like " enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock or such other securities" exist, I agree using as loan collateral is pushing the limits, if not past it. Many companies have much simpler language. Mine was just "will not sell or otherwise dispose of shares", which permits not only loans, but more powerful techniques like hedging.