Recessions and stock market crashes are inevitable in a market-based economy, but few Americans realize that their investments face risks far greater than falling stock prices.
Because of largely unknown legal changes, millions of Americans could temporarily or even permanently lose their retirement and other investment savings in the next major financial crash, all while too-big-to-fail Wall Street firms and banks are protected.
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Under the current DTC model, most investors no longer directly own their securities. Instead, they hold what the law refers to as a "security entitlement." This arrangement is contractual in nature. It grants certain rights and protections, but it does not confer direct registered ownership. When you buy stock in a company, you do not actually acquire the stock itself. You get a set of investment rights tied to that stock.
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Under Article 8 of the Uniform Commercial Code, if a brokerage firm collapses during a financial crisis, secured creditors, including banks, may seize securities used as collateral in lending arrangements with broker-dealers. This can include customer securities, such as stocks and bonds, if they were pledged as collateral for those loans.
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Because of largely unknown legal changes, millions of Americans could temporarily or even permanently lose their retirement and other investment savings in the next major financial crash, all while too-big-to-fail Wall Street firms and banks are protected.
....
Under the current DTC model, most investors no longer directly own their securities. Instead, they hold what the law refers to as a "security entitlement." This arrangement is contractual in nature. It grants certain rights and protections, but it does not confer direct registered ownership. When you buy stock in a company, you do not actually acquire the stock itself. You get a set of investment rights tied to that stock.
....
Under Article 8 of the Uniform Commercial Code, if a brokerage firm collapses during a financial crisis, secured creditors, including banks, may seize securities used as collateral in lending arrangements with broker-dealers. This can include customer securities, such as stocks and bonds, if they were pledged as collateral for those loans.
Wall Street could seize your retirement savings in the next financial crash — and it's perfectly legal
Investigation uncovers how banking institutions secretly altered securities laws in the 1970s, prioritizing Wall Street over individual investors.
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