Tuesday, February 14, 2012

Direct Registration of Shares

Motivated by AGXIIK and his battle with the monkeys at Fidelity, I decided to stop putting off direct registration of my mining shares.  With these monkeys at the wheel, another MF Global like event could take place at any second.  You may be thinking my (or your) accounts at Fidelity are protected by SIPC insurance.  Technically you are correct.  And as long as the bank files under the correct bankruptcy code (something MF Global couldn't get right) you could throw your claim in with everyone else.  But the SIPC only carries $1 billion (supposedly, reference Fort Knox) of assets in their fund at any given time.  So out of the 4,773 member companies, it would take a measly 2,000 account holders (who probably have priority over you) of $500K for the fund to be depleted.  As far as that goes, do you really even own your stocks to begin with?
For those of you who have not heard of the Depository Trust & Clearing Corp. (DTCC) and you own stocks ... sit down.  This might change your your whole way of thinking.
Who is the DTCC and what does it do?  The DTCC actually provides clearing for 3.5 million securities from the United States and, get this, from 110 other countries and territories as well -- all valued at roughly $28 trillion.  In 2008 alone, the DTCC settled more than $1.88 quadrillion in securities transactions.

The DTCC is also the registered owner and holder of
your stock. 
At present, the DTCC holds $23 trillion in assets.  It has a virtual monopoly on clearing.  In fact, 99% of all stocks in the USA are legally owned by it. 
Tycoon Research

The legendary Jim Sinclair recently had this to say concerning general security positions (as in stocks) outside of owning physical gold and silver,

For your sake immediately take delivery of your gold and silver.
For your sake immediately take paper delivery of your gold and silver shares from those very few companies still willing to facilitate that kind of transaction.
For your sake immediately make your general securities positions "direct registration" as a second best method of protection the asset against failure of your clearing facility.
You all have clearing facility dependence even if you do not know it. Unless MF clients are made whole in every way, the system is broken.
This is no time to take any unnecessary risk.
This is no time to be lazy.

For those of you who have yet to complete the direct registration of your shares in your own name, and in response to numerous inquiries from SD readers in December in the wake of MF Global, we have partnered with Tekoa da Silva who recently released an e-book, BulletProof Shares, on how to register your shares directly in your name.  He also details how to receive paper certificates and the pros and cons associated with all three forms of stock ownership.  I utilized it today when I converted my general securities to direct registration and, in my opinion, its price tag was very reasonable considering it saved me a good 9-10 hours of research which I otherwise would have had to conduct myself.  

Here is a link to the book, BulletProof Shares, if you still have some paper assets registered with the monkeys/brokers.