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".

BREAKING DOWN '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.

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