Blind Pool

AAA

DEFINITION of 'Blind Pool'

A limited partnership or stock offering with no stated investment goal for the funds that are raised from investors. In a blind pool, money is raised from investors, usually trading on the name of a particular individual or firm, but few restrictions or safeguards are in place for investor security.

May also be called "blank check underwriting" or a "blank check offering".

INVESTOPEDIA EXPLAINS 'Blind Pool'

Blind pools are often a product of late-stage market rallies, when investors and financiers tend to become more greedy than prudent. Many fraudulent deals in the 1980s and 1990s gave blind pools a bad name. Sometimes these pools are born and later dissolved without making a single investment - but the managers or general partners still make off with hefty fees.

Some of the largest and most-respected Wall Street firms have underwritten blind pools. However, this backing aside, investors should be very cautious of any investment without a stated objective.

RELATED TERMS
  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Tontine

    A system for raising capital in which individuals pay into a ...
  3. Underwriting

    1. The process by which investment bankers raise investment capital ...
  4. Rally

    A period of sustained increases in the prices of stocks, bonds ...
  5. Limited Partnership Unit

    An ownership unit in a publicly traded limited partnership, or ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
Related Articles
  1. Brokerage Functions: Underwriting And ...
    Brokers

    Brokerage Functions: Underwriting And ...

  2. Interpreting A Company's IPO Prospectus ...
    Fundamental Analysis

    Interpreting A Company's IPO Prospectus ...

  3. IPO Lock-Ups Stop Insider Selling
    Investing Basics

    IPO Lock-Ups Stop Insider Selling

  4. Build A Wall Around Your Assets
    Retirement

    Build A Wall Around Your Assets

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center