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From: mazlack@ernie.BERKELEY.EDU (Lawrence J. &)
Newsgroups: net.invest
Subject: Re: Stockbroker selection, discount brokers.
Message-ID: <11156@ucbvax.BERKELEY.EDU>
Date: Thu, 5-Dec-85 14:21:31 EST
Article-I.D.: ucbvax.11156
Posted: Thu Dec  5 14:21:31 1985
Date-Received: Sat, 7-Dec-85 03:32:46 EST
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Reply-To: mazlack@ernie.UUCP (Lawrence J. Mazlack)
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>
>I can't agree with the idea of taking delivery of certificates. They
>are simply a pain to deal with, and when they are in your possession,
>you are responsible for loss or destruction.  You are protected in
>case of failure by SIPC (Yeah, I know, dealing with anybody after a
>default is a ROYAL pain), and otherwise you don't have to WORRY about
>the certificates; you have your confirmation of purchase slip and your
>monthly statement. [There is really nothing to lose track of; the
>actual certificates live in a vault in New York or New Jersey
>somewhere and the brokers just trade ownership of them with an online
>accounting system.]
>
>Michael C. Berch

Not really.  If the broker keeps the certificate, the broker can carry
your "ownership" of the stock as a ledger entry without aquiring the stock
from someone else. Furthermore, the broker is able to borrow against YOUR
stock, for the broker's benefit. Both of these activities, complicate
retrieving your stock in the case of failure.

Also, if a failure does occur, and they DO OCCCUR regularily, your stock
will be frozen for months - you will not be able to sell it or borrow on it.
The SIPC will PROBABLY eventually get your stock back for you, but if you
sustain a loss during the period (either because the stock price goes
against you, tax reasons, or hedge strategies), the loss is yours.

...Larry Mazlack