How To Protect Your Stock Investments In The Event Your Broker Dealer Goes Bankrupt

Deeply bothered by the MF Global(MFG) collapse, I spent the entire month of December researching a report which I’ve now released, entitled, “BulletProof Shares” – How To Protect Your Stock Investments From Broker Bankruptcy & Theft.

The reason I began researching and ultimately put this paper together was simple: fear. As a stock investor, I became afraid to continue holding my stock investments in the financial system. My investigations into this matter were both shocking and relieving as I’ve previously reported, for the reason that all the financial “safe guards” to protect investors from losses are flimsy at best. I’m indirectly referring to the SIPC when I say that by the way. I discovered that in the economic “good times”, the SIPC carries around a billion dollars in capital, which is raised from annual member company dues. But in bad economic times such as we’re in now, member companies go bankrupt and many fall behind in their annual contributions–while at the same time broker bankruptcies increase, putting a tightening financial noose on the entire organization.

Easily Severing Broker Dealer Counter Party Risk and Removing Your Shares From The Financial System

The relieving aspect of my research was the discovery of how easy and simple it actually is to protect and remove stock investments from broker dealer’s custodial possession and the financial system itself. By default, stocks are always purchased under the “street name registration”when you purchase them with a broker dealer. This means the stocks are held in custody under the name of the broker dealer you’re using. The two alternative methods which serve to “de-risk” your shares from counter party risks in the system, are “direct registration” and “paper share certification”.

Direct registration and paper share certification are covered in depth in“BulletProof Shares”. It took hundreds of hours of research pouring through the internet, and speaking with dozens of transfer agents, brokers, and public companies. While I highly recommend stock investors purchase a copy of “BulletProof Shares,” I’d also like to point out that anybody can use these methods at no cost, provided they do the research on their own. All my data was acquired from public sources and companies which happily hand it out(some less happily than others I might add) for free. So the question for most people is simply a matter of value vs time. Spend a couple bucks and save a few hundred hours, or spend a few hundred hours and save a couple bucks. The choice is yours. (more)