Last month, the U.S. Treasury issued this press release announcing a secondary public offering of warrants to acquire the common stock of a financial services holding company. The company originally issued the warrants to the Treasury in a private placement under the Capital Purchase Program established by the Treasury as part of its Troubled Asset Relief Program (“TARP”) as authorized by the Emergency Economic Stabilization Act of 2008.

When Buying From The Government, It’s Caveat Emptor

Being intrigued by the idea of the government as a selling security holder, I took a look at the prospectus. This risk factor caught my eye:

The Selling Security Holder is a Federal Agency and Your Ability to Bring a Claim Against the Selling Security Holder Under the Federal Securities Laws May Be Limited.