I posted this over at the NSS thread, but since it has gone dead, I thought I would post here and hopefully get some discussion out of it.
Perhaps this is a silly question, but I would like to understand a couple of aspects of the failures to deliver/failures to receive dilemnas from the perspective of the individual investor:
1) Say that I have purchased 1000 shares of company XYZ, and it is well past settlement date. My brokerage statement says that it contains 1000 shares of XYZ.
2) I as an individual investor have confidence that I actually own these 1000 shares of XYZ, because it says so on the paper.
3) This may not actually be the case, as I may have received an "entitlement" to these shares instead.
So, if I call my broker, do I have any right to know whether I actually own those shares? It seems completely reasonable and logical that I have that right. In the case of the purchase of a physical asset, it is quite obvious whether I have actually taken delivery of the asset, say a house for example. And I would be rather displeased with receiving an "entitlement" to a house - it isn't quite the same thing, I can't live in a piece of paper.
So, I have followed all the press on this topic, and to me, in its simplest form, completely aside from the issue of raising the float of a given security, a heck of a lot of people don't really own something they think they bought. I'd appreciate any thoughts on flaws in my reasoning above.
So, if I am correct (I have no right to know whether I have received actual shares or an entitlement), why hasn't anyone tried to change this visibility? Seems to me that this would raise an uproar to a lot of investors who either don't understand the issue or figure it really doesn't affect them. If a million individual investors suddenly found out that they don't actually own what they think they own, wouldn't that raise an awareness that doesn't seem to be happening on this issue?
Thoughts? |
