SEC responds to my SLFP program inquiry:
<<Dear Mr. XXXXX:
Thank you for your patience while we researched your complaint.
You may wish review the terms of your specific SLFP agreement to understand the conditions and any risks and potential liabilities.
A brokerage firm cannot lend out fully-paid or excess margin securities without a customer’s consent. In a margin account, a brokerage firm can lend the securities out within the terms of the margin agreement. To lend the customer’s fully-paid and excess margin securities out, the brokerage firm must comply with Rule 15c3-3(b)(3). A copy of Rule 15c3-3(b)(3) is available at: law.uc.edu (please note that the SEC does not monitor or maintain this Web site).
Without seeing the all terms of the program, the brokerage firm would at least need to meet the terms and conditions of 15c3-3(b)(3) in order to be permissible.
The rule also requires the brokerage firm to disclose that SIPC insurance may not protect a customer in a securities loan transaction and that the collateral delivered to a customer may be the customer’s only source of satisfaction of the brokerage firm’s obligation if the brokerage firm does not return the shares. If you are unfamiliar with SIPC insurance coverage, please read our “fast answer” at: sec.gov.
I hope this information is helpful.
Sincerely,
Steven G. Johnston
Special Counsel
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549>>
the operative statement, IMHO, is: "A brokerage firm cannot lend out fully-paid or excess margin securities without a customer’s consent."
cash accts -- including SEP-IRA and IRA accts -- cannot have the shares therein lawfully borrowed absent the holder's consent, at least if I am interpreting this correctly (BTW, why is it that the tax and securities laws are so byzantine? ...that's a rhetorical question; we all know why...)
P.S. welcome aboard, all newbies. JSB gets the (well-deserved) credit 4 starting this board, which has been a pleasure to participate on. no mindless bashing or pumping here - just honest, rational dialogue about HSOA, a welcome and refreshing change.
let's all help each other make money, shall we? |
