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Technology Stocks : C-Cube
CUBE 37.31+1.1%12:54 PM EST
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To: Richard H. who wrote (14607)4/27/1997 8:41:00 PM
From: robt justine   of 50808
 
Richard H.:
In your specific case, "Prudential Securities" is the Trustee of your Individual Retirement Account. As Trustee, they are considered a fiduciary or "disqualified person" as relates to Section 4975 of the Internal Revenue Code. Should a "prohibited transaction" take place within your IRA, it is subject to disqualification according to IRC Section 408e(2).
The following is from IRC Section 4975 which spells out certain actions which can be defined as a "prohibited transaction".

<<(c)Prohibited transaction
(1)General rule. For purposes of this section, the term "prohibited transaction" means any direct or indirect -

D)transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;
E)act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interests or for his own account; or
F)receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan. >>

In addition to the possible disqualification of your IRA for the loaning of its securities to a third party for the financial benefit of Prudential, there would also be penalty taxes to be paid by Prudential for the transaction. (These taxes would pale in comparison to the monetary value of your potential lawsuit against the firm).

In brief, the answer is don't worry about the assets in your IRA being handed over to the shorts to work against you. Hope this helps.
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