Reddit User u/StayPositive2024 contacted Trade Station to do some transfers of stock certificates. Source here.

To Which TradeStation, as above, mentioned that the Certificates cannot be transferred due to being held by AST as some sort of holding Trust for their stock certificate.

AST being the American Stock Transfer & Trust Company, a Transfer Agent for the mentioned security.

To comply with their ‘de minimis’ amount of shares.

So the Broker, TradeStation, is unable to transfer shares of their user held in street name, until more shares are tradeable in the open market or made electronically available.

Yes, that’s right, the screengrabs alleges that a User bought shares under Street Name and was not authorized to transfer said shares due to the Broker being illiquid and Short the shares they have on record.

Maybe we can paint the tape and chalk it up to a T+23 issue? Eh? Any takers? (bad joke, I know).

And the Customer got upset, and the representative assuaged the customer unsuccessfully by citing some baloney about how due to -reasons- TradeStation as the Broker wasn’t awarded the shares made in the trade.

They were “allocated less shares than the firm’s overall customer position”

Which means that the customer bought things, and the Broker claimed to have had them to the customer, but didn’t have them.

Also, TradeStation claims that the shares may not have yet transmitted to AST (to then be, i guess, sent back to TradeStation for their books),

-And if they aren’t then they are being held on TradeStation’s Books of Record versus loan and lending counterparties.

Which contradicts the first statement, in which they state that they didn’t have them in the books.

And I guess the Representative isn’t too well versed or formal or was having a bad day and gave a curt response.

I mean, technically, a broker does take the money. The joke is that they’re not supposed to keep all of it.

The Follow up,

As it turns out, TradeStation, like many other broker (Cough ROBBING HOOD), marked the account as a lending account rather than a cash account.

Meaning the account was automatically and de facto allowed to have shares lent out from the get go. Regardless of it being a full cash account and dealing with cash only.

Unless explicitly agreed upon prior to the arrangements per their terms of service. . .

-I guess this is apparently going to be the industry standard because everyfucking broker is doing it apparently.

So, user bought shares, wanted to transfer certificates, was denied due to his account being made a lending account, to which, I doubt the user received any money for the lending of his securities held in street name. Ultimately resulting in the inability to transfer the ownership of said shares due to the nature of ownership, even in an entirely cash funded account.

Moral of the story is always the same.

Brokers are not your friends

In Closing,

original source and the follow up. As of record Feb 21 2024 and so forth.

Brokers are more and more leaning to unscrupulous means of marking cash accounts as margin as a ‘starter’ when people open up new account positions.

But arguably, it could be in the fine print prior to.

And arguably, they could just auto enroll you when they decide to change their terms and conditions in the near future.

The legalities aren’t clear here, not in my opinion. But the spiritus is seen clear as day.

Brokers are not your friends.

*Not Valid Financial, Legal, Life, or Any Advice