Acquisition for own account: Overview, definition, and example
What is acquisition for own account?
Acquisition for own account refers to the purchase of securities, assets, or investments by an individual or entity for their own benefit, rather than on behalf of others. This term is commonly used in the context of financial markets and securities trading to distinguish between acquisitions made for personal investment purposes versus acquisitions made on behalf of clients or as part of a larger fund management strategy.
For example, when a company executive buys shares in their own company for personal investment rather than as part of their professional duties or on behalf of clients, this is considered an acquisition for their own account.
Why is acquisition for own account important?
The concept of acquisition for own account is important because it helps differentiate personal investments from professional or fiduciary activities. It establishes the boundaries between an individual's or entity's personal financial interests and their responsibilities toward clients, investors, or stakeholders.
For businesses and investors, distinguishing between acquisitions for own account and those made on behalf of others ensures transparency and helps avoid conflicts of interest. This concept is also relevant in regulatory contexts, where certain rules, such as those related to insider trading or fiduciary duties, may apply differently depending on whether the acquisition is made for personal gain or on behalf of others.
Understanding acquisition for own account through an example
Imagine a corporate executive who works for a publicly traded company. The executive decides to purchase a significant number of shares of the company’s stock for personal investment purposes. Since the acquisition is for their own account, the executive is purchasing the shares as an individual and not on behalf of the company, investors, or clients. This is distinct from any transactions the executive might make in their professional capacity, such as buying securities on behalf of a client fund.
In another example, an individual investor buys stocks through their personal brokerage account, intending to hold the shares for the long term. Since the purchase is made for the investor's own benefit and not as part of a fund or on behalf of others, it qualifies as an acquisition for their own account.
An example of an acquisition for own account clause
Here’s how an acquisition for own account clause might appear in a securities or investment agreement:
“The Purchaser affirms that the securities being acquired under this Agreement are being purchased for the Purchaser’s own account and not with the intent of reselling, distributing, or otherwise transferring such securities to others, except in accordance with applicable laws and regulations.”
Conclusion
An acquisition for own account refers to the purchase of securities, assets, or investments made for personal or individual benefit, rather than for the benefit of others. This distinction is crucial in financial transactions to ensure transparency and proper compliance with regulations.
For businesses and investors, understanding the concept of acquisition for own account is essential for maintaining clarity about ownership, fiduciary responsibilities, and conflicts of interest, particularly when it comes to trading or investing in securities.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.