(02-03-2024, 02:42 AM)p_rushing Wrote:

(02-03-2024, 12:06 AM)Jaguarmeister Wrote: You would have signed an advisory agreement allowing them to do that and neither of those two companies engage in margin trading on client accounts in their advisory arms. Otherwise, just having a self directed account at the big firms doesn’t allow them to do any of that or exert any other type of control of what you invest in with your account (unless it’s restricting access to certain private investments), nor can they settle their debts with securities registered in your name.  If Fidelity or Schwab fail as companies and you own Apple stock in an account with them, you still own those shares whether Fidelity or Schwab cease to exist or not.

The last part is not true. The only way to ensure you own the share is to direct register it. For Fidelity, they can do whatever they want with the share you supposedly own. There is an option that supposedly stops them from lending your share but you have to set that and most people don't.

Retail buyers don't really own any of the shares and we have no clue what would happen if a company like that failed.I doubt you keep your shares if they fail.




For the Jags, Fanduel does have some responsibility to confirm the money was legal. For what he was losing, they should have known he didn't have the income for it. He even had a vip rep assigned to him. They finally told the NFL about him and that's when the Jags found out. A simple check of the credit card would have shown it was a business card and not a personal one.

I don't know why the transactions weren't flagged by the credit card company but maybe they did and he told them it was fine.

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Yes, you still own the shares whether registered with a broker or directly with a transfer agent.  Your name is still listed as the beneficial owner when held through a broker.  And what you're referring to regarding "doing whatever they want" is in reference to them loaning your shares out to other investors who are shorting the stock and/or liquidating a client's account to cover bad shorts.  Short positions aren't long term investments.  You must have a margin account to short and bad short investments get margin called and the investor's account would get liquidated as needed to cover the short position if the investor didn't produce additional cash almost immediately to cover.  The likelihood that a big broker would fail due to mass shorting by their customers is nil as very few investors actually understand or engage in shorting and other assets in their account would get liquidated to cover prior to threatening the broker's balance sheet.  Also, if many short positions were getting squeezed it likely means the market has gone up and brokerages make money in a lot of different ways, but more so in up markets.  Step out of the paranoia, friend.  

The big brokerages aren't going anywhere because they specifically don't engage in excessively risky behavior with client accounts because there's too much for them to lose in court by ignorant investors or those feigning ignorance vs what they might gain.  If you sign an advisory agreement with one of them and put your account at the highest risk level, you'll wind up with a 100% stock portfolio with a lot of blue chips.  Not that there isn't some risk in that, but it's far from the riskiest behavior an investor can engage in.  They don't trade on margin on your behalf and they don't trade options on your behalf (perhaps they've delved into covered call writing income strategies, but that's quite tame as far as options go).  If you want non-cookie cutter or riskier strategies, you would seek a 3rd party RIA advisory firm that offers what you are looking for or do it yourself.  Madoff was a 3rd party advisor.  I haven't reviewed the specific details of the case, but I would assume he was running some sort of hedge fund that required clients to wire funds to an offshore account. Hedge funds are significantly less regulated than what goes on at the large brokerage houses.  

When a 3rd party advisor custodies client assets at Fidelity, Schwab or the like, the client grants them limited power of attorney over their account to be able to trade, bill and disburse funds on behalf of the client.  They can't fudge numbers and engage in ponzi schemes in such an arrangement as the brokerage house is the primary record keeper, not the advisor.  Madoff took direct custody of client assets and could produce statements saying whatever he wanted them to say.  By contrast, an advisor custodying client accounts at Fidelity or Schwab will still have Fidelity and Schwab producing statements and tax documents.  If you engage a 3rd party advisor and they ask you to transfer assets to somewhere other than a brokerage you're familiar with (i.e. an offshore account), that should be viewed as a red flag.  Madoff type behavior can't happen when your assets are held directly with the big boys.

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