restricted investment & finance definition

A stock or other investment that is off limits. Restricted investments are those that employees of an investment bank are not allowed to trade because the company that made the investment is involved in other non-public transactions that are being handled by the bank. For example, merger deals, stock offerings, or bond offerings that are being planned but haven’t yet been announced put the company on the restricted list. Typically, a bank requires its employees to trade only through an account provided by the bank. Restricted transactions are prohibited and the employees’ trading activities can be monitored. The bank itself can’t trade the company’s stock for its own account, either. However, it can do transactions as a broker for its clients.