Do You Own Shares?… BEWARE

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By Chris C. (August 2016)
How do you protect yourself in a stock market crash?

Currently, if you own shares in the US stock market, it would be through a third party or broker. These shares are aptly named “Streetname”. You appear to own the shares and receive dividends in your name, but the shares are truly owned by a third party – e.g. Melon Bank of New York. This third party is tied to an entity that will not survive such calamity. Your holdings, managed by them as custodian, will sink with the entity; they are in their custody, and as with anything that involves insolvency, unsecured creditors receive zero.

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