Letter of Confirmation of Investment

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You may receive a letter from an auditor asking you to confirm your investment in a public or private company. You also may receive a letter from a bank asking you to confirm the balance in a savings account. Another confirmation letter originates with your broker following a trade. A very different kind of investment confirmation letter originates as an Internet scam.

Trade Confirmations

  • If you have not authorized your broker to confirm trades by e-mail, you will receive a letter of confirmation following either the date of the trade or settlement. For active traders or investors with larger accounts, these letters quickly become more of a cluttering nuisance than a useful source of information. As of 2011, anyone with an brokerage account can get the same information online, often in a form that makes it easy for your tax-preparer to transfer the information digitally to your tax return. Increasingly, customers opt out of paper confirmation letters in favor of e-mail confirmations.

Letters of Confirmation from Auditors

  • You may receive an investment confirmation letter from an auditor, often one of the larger accounting firms, such as Deloitte & Touche. The letter will ask you to confirm certain particulars of one or more of your equity investments, at a minimum the transaction dates and the number of shares. Since 2003, brokers must make a positive confirmation when a new account first trades and thereafter every three years. These SEC-required confirmations will also ask you to confirm your investor status -- such things as annual income, net worth, investment objectives and risk tolerance.

Limited Partnership Investment Confirmations

  • A related investment confirmation letter may come from a bank or other institution underwriting a limited partnership. The promoters of the partnership usually have certain subscriber goals to meet in order for the underwriter to release funds to the general partners. Your response indicating that you have bought one or more limited partnership shares confirms your participation.

Dubious Letters of Confirmation of Investment

  • You may sometimes receive another quite different investment confirmation letter, usually be e-mail, confirming that you hold shares in an investment you have never heard of. Often the letter states that the asset has gone unclaimed, and that the writer of the letter will help you assert your (illegitimate) right to the claim for a percentage of the asset. These letters -- a well-known Internet scam -- will advise you that to confirm your willingness to participate, you must deposit a relatively small amount of money in the sender's bank account.

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