Jointly and Severally
Categories: Regulations, Banking
If we, along with a group of friends, take out a loan to start a company that manufactures rocket-powered roller blades, then we are all jointly and severally responsible for paying back that loan. And if our group then gets sued, because rocket-powered roller blades are a horrible idea and people are getting injured all over the place, then we are jointly and severally responsible for fulfilling the terms of the lawsuit.
“Jointly and severally” is basically a fancy, legalese way of saying, “we’re in this together…contractually.” We’re obligated to do what we said we were going to do, and if we don’t, we could face legal and financial repercussions.
This also applies to organizations and underwriters working together to issue stocks and bonds. When they agree to jointly and severally issue those securities, they also agree to jointly and severally bear the financial brunt if things go...pear-shaped.