There was a reddit user “Free_Stick_” who opened a Financial Regulatory case against the brokerage eToro asking to prove share ownership and registration.
Other users also had asked similar questions.
This resulted in a case with the Australian Financial Complaints Authority,
It’s also fair to note that this is a third party organization. So that ‘Authority’ is very misleading,
And the result of the case was that due to the Terms and Service and Fine print, the Brokers didn’t have to disclose such information.
So Brokers don’t owe their ‘clients’ proof or information on share registration or ownership based on a probe/case by a third party ‘Financial Authority’.
You could argue that this privacy or indisclosure is to prevent information like that from being leveraged in front running or similar trading scheme, however, if you own shares in your name, wouldn’t you want to know if they’re yours?
As it turns out, with things like Omni-bus arrangement accounts and the Continuous-Net Settlement system, there’s a good chance that the shares you allegedly ‘beneficially own’ aren’t really yours nor tied to you. I mean, there’s not a system in place that I know of, in which Brokers connect 1 for 1 each share they are recorded to have own, paired with each share they’ve registered on behalf of others.
It’s like a ledger but the numbers don’t add up, mainly because no one adds up the numbers, like ever.
And the great part of all of this is that Brokers don’t have to tell you if your shares are yours, or prove to you that those shares are yours (Based on the above information).
In case you didn’t know,
Brokers Aren’t Your Friends.
Yea, you’re able to question the Registration and Ownership of shares by a broker, but that doesn’t mean they’ll answer yah (It’s like how I talk to trees, except they don’t talk back).
This is just another grain of sand in the desert of reasons not to trust brokers. I’d argue you shouldn’t trust any fiduciary unless they are held fiduciarily accountable. Meaning if they mess up, they should pay you for their mess ups in a sum amount greater than them messing up.
It’s only fair, and good business acumen.
And judging by the Tom Foolery and Swindling nature of agreements, it seems the threat of law or legal repercussions aren’t enough to keep Brokers Open and Honest. Or else, you know, Brokers would be -well- Open and Honest.
So, yea. Don’t trust em. Not even in these times.
Robber Barons existed in the 1920’s and they got away with it. Why wouldn’t they set up shop 100 years later? Think about it.
*Not Valid Financial, Legal, Life, or Any Advice