Bad-Boy Provision Law and Legal Definition

Bad-boy provision refers to a regulatory clause stating that certain persons are not entitled to any type of exemptions from registering their securities, because of their past conduct. A bad-boy provision generally prohibits issuers, officers, directors, control persons, or broker-dealers from being involved in a limited offering if they have been the subject of an adverse proceeding concerning securities, commodities, or postal fraud. A No-compete forfeiture clause is commonly known as bad boy provision. [Hauck v. Eschbacher, 665 F.2d 843, 845 (8th Cir. Mo. 1981)].