If I Buy Stocks Online, Will I Be The Holder On Record, Or Will The Brokerage People?
Sunday, June 7th, 2009 at
5:22 pm
If I buy stocks in a company through one of those online services (AmeriTrade, ETrade, etc), will the company I buy stock in have me as being the stockholder on record or AmeriTrade, ETrade, whatever?
Specifically, will any annual reports, shareholder meeting notices, etc. be sent directly to my house?
Tagged with: Brokerage • Holder • Online • People • Record • Stocks • Will
Filed under: How To
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You are the holder of record if you instruct the broker that you want to be. This means that the broker will have a stock certificate issued in your name and sent to you, possibly for a large fee.
If you leave the stock in the account, as most people do, then the answer is: neither! The brokers don’t want to be handling certificates all the time either, so there is a place called the Depository Trust Company that has accounts for all national brokers, so when Merrill Lynch’s customer buys stock from an ETrade customer, DTC makes a computer entry transferring shares from ETrade to ML. The company still thinks that DTC is the owner and sends dividend payments to DTC who divides the money among the brokers who divide the money among their customers. (There are some places besides DTC, but they only do small regional transfers and operate exactly the same way.)
When you open an account with a broker, either on-line or in person, you provide the broker with instructions as to how you want you stock held, (either transfer & ship to you or held by the brokerage firm) AND how you want dividend and proceed checks sent (Hold in account or mail to you)
If the brokerage firm holds your stock, you are considered the “benefical owner” while your broker (or the clearing firm) is the registered owner, (owner of record)
All dividends are credited to your account, the broker will follow the instructions when you opened the account.
All mailings, notices and proxies for the company will be sent by an outside service company. Your address is provided to the vendor upon their written request. The address used will be the address of record on your brokerage account.
LARRY – if you are addressing the US market and US brokers, your response is not correct
unless you hold it in paper form then your holding with be held in a nominee account, you will still receive all financial benefits such as dividends, but you wont probably get the annual report, and possibly not a proxy voting card.