Are the shares you buy real?

Option Trader · Mar 25, 2009

Is there any way of telling if the shares you are buying are from the orginal issued ones, or if they were "printed" from the market maker?

Option Trader · Mar 25, 2009

...I know it's possible to request the stock certificates for a fee. But if I'm not mistaken, is it not so that you can buy shares the market maker "prints" then claim stock ownerhship certificates?

Surdo · Mar 25, 2009

Why would you ever want/need the Stock Certificates, unless you were hanging a share of Disney on your son's wall as decoration?

Hurricane · Mar 25, 2009

I don't think you can normally tell because at most brokers your shares are held in street name (i.e. the broker is the registered owner). Therefore, all of the clients owning the same stock own a piece of the broker's total shares in the stock but they are not individually assigned.

stock777 · Mar 25, 2009

What you really want to know is the kind of paper its printed on, and if the ink is still wet.

Option Trader · Mar 25, 2009

Quote from Hurricane:

I don't think you can normally tell because at most brokers your shares are held in street name (i.e. the broker is the registered owner). Therefore, all of the clients owning the same stock own a piece of the broker's total shares in the stock but they are not individually assigned.

A) What you're saying makes sense, and explains nicely the issue of "hard to borrow" shares--as versus the number of shares held by the clearance firm. B) Where can one get more specific information about what you are saying?

Hurricane · Mar 25, 2009

You might look at your broker's agreement which defines that the stock is held in street name and also how they handle forced purchases when they no longer can borrow enough shares and have to randomly choose which customer gets hit.

KINGOFSHORTS · Mar 25, 2009

Also with a type 1 account (cash) your shares stay put at the brokerage.

Margin type 2 your security could be loaned out. So technically it is possible that your securities are loaned out to a short seller. The risk is what happens if your security is loaned out, the counter party who borrowed the security defaults and your broker also defaults.

Two boxes. One holding all the cash shareholder securities in street name, cannot be loaned out.

The other holding the security of type 2 customers in street name, can be loaned out to short sellers.

And you have naked shortselling, selling virtual securities and then attempting a locate after the fact