YOU DON’T OWN WHAT YOU THINK YOU OWN

If you own stocks or bonds or any investment through a broker, you don’t really own those investments. They are pooled and if the broker goes under, you’re shit out of luck. Not only don’t you own the investments you bought with your own money, but your broker has pledged those assets many times over. The Casey Report has a jaw dropping interview with hedge fund manager David Webb, who reveals the truth about our financial system. The conclusion is that your owners don’t give  a fuck about you. They have your money and they want more. And they will get it. Here are a few choice quotes from the interview:

“It took me some years to uncover the basis for how this has changed. It all arises from a revision of the Uniform Commercial Code, Article 8, in 1994. This article governs securities “ownership.” When they did this revision in 1994, they created a completely new legal concept called a “security entitlement,” which means that a security is now a contractual claim rather than property. That’s the key, and it’s hugely important because a contractual claim in a bankruptcy proceeding has very little standing. So even though there are records that a particular security is your property, it’s really not. If your broker goes bankrupt, those securities, by law, become part of the bankruptcy estate. As a client, you cannot revindicate those securities in a bankruptcy. Of course, secured creditors have a higher priority to the assets of the bankruptcy estate than you do. So you’re left with an inferior claim to what you thought was your own property.”

“But it gets worse. All of the securities are pooled – there is no specific identification of who owns what. By law, in a bankruptcy, the losses must be shared pro rata across the client pool. So even if a client somehow manages to get a legal assurance that their securities are not being hypothecated, they are still in a pool where other clients have margin accounts and their securities are being hypothecated. Hypothecation is when a firm pledges a clients’ assets as collateral to another party. The securities firm is allowed to use the client assets as collateral for its own proprietary trading. In my book, that’s fraud. But it is perfectly legal. So the securities firm borrows the security on the assumption that it will return like securities to the pool. But, of course, when an insolvency occurs, the music stops and those securities are not returned. The firm that received those securities as collateral is a secured creditor, and if there is a bankruptcy, they take those assets – the assets you thought you owned – and immediately sell them. They are gone. And you’re left as an unsecured creditor, which means you get what’s left over at the end, if anything. Further, in 2005, the Bush administration rewrote the bankruptcy law. There used to be a concept of “fraudulent conveyance,” which meant that if a firm transferred assets to a secured creditor within six months before its bankruptcy filing, the receiver was required by law to give those assets back. It’s called a clawback. But this revision of the bankruptcy law changed that. The law now specifically says that the receiver is not to claw back the assets. So what was considered a fraudulent conveyance prior to 2005 is now legal. This is very similar to what happened with MF Global and their transfer of client assets to JPMorgan. But it was not considered fraud. Everything was done according to the law.”

“One set of assets can be used as collateral multiple times, which is called rehypothecation. So a securities firm gives client assets to a secured creditor as collateral for proprietary trading. The secured creditor can then turn around and use those same assets as collateral for their own proprietary trading. So those assets are passed on to another firm as collateral, and so on. This is the chain of hypothecation and rehypothecation; the same assets are used as collateral over and over again. I can’t stress this next part enough – it’s very, very important. There are about $700 trillion of derivatives worldwide in a $70 trillion economy. It’s pretty easy to see that there cannot possibly be enough collateral backing. The entire financial asset base of the public is being used as collateral. This is a huge risk that everyone bears, whether they know it or not. If we have a major failure anywhere in that collateral chain, the collateral is pulled out and cannot be returned to the pool.”

When the collapse ensues, they will take your money. Laws won’t matter. Justice won’t matter. Fairness won’t matter. You won’t matter. They want it all.

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KaD
KaD

Anybody still in the markets at this point is not thinking clearly or at all.

Stucky

Does the same hold true for Gold, and other PM’s?

I’m thinking (guessing) that unless you have PHYSICAL POSSESSION …. you don’t own shit.

Stan
Stan

It’s true folks. You actually own very little.

Eddie
Eddie

When it comes to gold and silver held as paper assets, you are at the mercy of the broker as described above.

This has been made abundantly clear by the way the MF Global bankruptcy has been handled. Some 1.2 Billion dollars in customer funds were simply stolen, and the bankruptcy judge put the claims of those individuals at the tail end of the line, behind all the corporate claimants.

Some of those lost assets were not cash, but were “supposed to be” gold bullion held in sequestered accounts.

While I sometimes hold paper assets in my trading account, I do it with the understanding that there is a new form of risk in this type of trading…the risk of fraud and expropriation by criminal insiders.

AWD

“There are about $700 trillion of derivatives worldwide in a $70 trillion economy.”

The explanation of financial and economic Armageddon in one sentence. Derivatives will implode sometime soon, when Spain, Italy, or Greece collapses.

How soon people forget MF Global or being “Corzined”. That $1.4 billion vaporization will look like a walk in the park compared to what is coming. It’s truly hard for me to believe how anyone would voluntarily have any money invested in the market. You can’t even count on the fraudsters and criminals being punished for their actions. They walk free among us. You can only be a victim if you choose to be, at this point. There is no excuse for being gullible or ill-informed.

AWD

I like to think I own my house. But I don’t. If I don’t pay property taxes, they take my house.

Like Colma says, if you can’t carry it, you don’t own it.

Ron
Ron

Duh. It can all vaporize like smoke.I never liked the idea that you buy a house or property and pay for it free and clear and someone can take it because of a tax.

Stucky

I just submitted this thread (below). Not sure if it will be visible in time.

========================================================

Felix Baumgartner will undertake a stratospheric balloon flight to more than 120,000 feet / 36,576 meters and make a record-breaking freefall jump in the attempt to become the first man to break the speed of sound in freefall (an estimated 690 miles / 1,110 kilometers per hour), while delivering valuable data for medical and scientific advancement.

As of this moment (12:33PM) he’s at 71,000 feet.

YOU CAN WATCH IT —— LIVE STREAMING here. So far 3,000,000 are logged in,

http://www.youtube.com/watch?v=MrIxH6DToXQ&feature=player_embedded#!

Unreal. I think this guy is going to die.

Darwin

If you’re short stocks and have a large paper gain and the system implodes, can firms keep those gains as well? I mean, after all, the shares that were “borrowed to short” aren’t actually owned by anyone under this premise either?

jMusing
jMusing

Sounds like they will ultimately turn everything over to the Christians…

“Whether Paul, or Apollos, or Cephas, or the world, or life, or death, or things present, or things to come; all are yours; And ye are Christ’s; and Christ is God’s.” (1Co 3:22-23)

All is based in spiritual realities.

There’s always hope in Jesus Christ.

Come to Christ.
And the eternal adventure will begin
🙂

Goldorack
Goldorack

One pin point hole in his suit, and his blood will boil…
Kind of funny.
Funny too that we are all the next on the stratospheric jump list…

fool on the hill
fool on the hill

Maybe we rent our homes from the state……………………………………..BUT.

There is a bug repellent called CORBON that keeps the gedarmarie at a safe distance where I live.

AWD

comment image?1349547922

Eddie
Eddie

Darwin

Yup. Gains from shorting are at risk, just like any other.

Stucky

jMusing

In the past 30 days one of Ms Freud’s acquaintances told Ms Freud that she had a “come-to-Jesus” moment, and she used those exact words.

The circumstances briefly; this woman’s husband stopped making mortgage payments for the previous 4 months. He also failed to file income tax, both business and personal. This was done unbeknownst to her. So she goes grocery shopping, uses her debit card, and it’s declined. Later that day she goes to the bank and discovers that the IRS took $18,000, leaving $10 in the account.

She did call upon Jesus, but probably not in a way that would please you. I will tell her about Paul, Apollos, and Cephas …. maybe they can help.

indialantic
indialantic

Stucky is most correct. There is only ONE WAY to safely own PMs bullion or coin: physical possession on your own property. The only way to own stocks is by having a stock certificate or having direct registration shares (DRS) for your stock securities.

Jim Sinclair has discussed this topic at his web site on multiple occasions. Commentary from Mr. Sinclair:

Sentinel Ruling And What It Means For Your Street Name Shares

September 12, 2012, at 6:51 pm
by Jim Sinclair in the category General Editorial | Print This Post | Email This Post

My Dear Friends,

The Sentinel Ruling is now a legal precedent. In bankruptcy of your bank, broker or fund, you can find your assets in the majority of cases are backing the liabilities of the entity in front of yourselves. This is why you must act to protect yourself.

No one in this financial world is going to do it for you, and few will have the courage to recommend you escape Street Name. The Sentinel Ruling is the law and you can wake up one day and find out that your investments are gone.

The insurance programs will function as long as the incidents of bankruptcy are isolated events.

In a systemic collapse the insurance funds are not capitalized to meet the potential obligations. The guarantor you are relying on will have to be bailed out.

For securities there are only three ways to hold them:

1. Street name.
2. Direct registration.
3. Certificate form.

Anyone advising you to stay with the Street Name option is a babbling idiot not interested at all in your welfare.

In street name the inferred ownership is the broker or bank, not you. In Direct Registration and Certificate form, the distinct ownership is you.

In 99.9% of the cases of retirement accounts the answer is you are in Street Name.

How are your securities held? Do you even know? I dare you to ask!

Do you know what your broker’s capital ratio is? Find out as that number is the order of magnitude at which your broker is gambling on with primarily your money. I dare you to ask.

This time around those investors that are too lazy to consider protecting themselves will be demolished.

How would you like your gold shares at $3500 gold, outperforming gold, and one morning you wake up to having nothing anymore? It is because of the Sentinel Ruling that you now are behind the back burner in a bankruptcy situation with any fiduciary.

The system and their minions will do everything to keep you trapped in Street Name. Articles will be published trying to put you back to sleep on this issue.

Wake up, please.

Regards,

Jim

Sentinel Ruling And What It Means For Your Street Name Shares

BB THE TROLL

TO STUCKY You can be a real jerk

BB THE TROLL

TO j MUSING All is based in spiritual realities, so very true and CHRIST is GOD and GOD isCHRIST.

MuckAbout

@DaveL: Good for you.. At 74 and going into chemo tomorrow (which means I won’t be around to annoy anyone for a few weeks) I peek at every opportunity. You can age the ability out of a man but you cannot age the desire or enjoyment of looking!

MA

AWD

Muck,

Good luck with the chemo. I can’t begin to imagine how miserable that must be. I hope it works, and will be saying prayers for you.

John the lawyer
John the lawyer

You guys are bumming me out.

Kill Bill
Kill Bill

Possession is 9/10ths of the law

llpoh
llpoh

I own no stocks at the moment, but if I did I would absolutley only own those where I get the actual certificates. Otherwise, you are seriously liable to get screwed by the “broker”.

BB THE TROLL

IF your gold or silver is in a box at the bank the state can still take your money.THE BANKER told me the only way i could be sure not to lose my silver was to take it home.Then you have to worry about someone breaking in at home and taking everything.Damn shame.

Dave Doe
Dave Doe

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Dave Doe
Dave Doe

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DaveL
DaveL

MA. Good luck and God bless.

Ron
Ron

If it isnt a real material thing in your possesion.I wouldnt count on it not disappearing.Or being taken away.
The market?buy some vasline and get ready.

GJH

John A – Right on.

Jim Sinclair has been on this for a long time, and covering it almost daily in August and Sept. of this year.

Many brokers have given his readers the runaround when they have inquired about transferring their shares out of street name into DRS or physical certificates, whether out of ignorance ill intent.

Here’s a counter-point in a conference call by Rick Rule that helps clarify the issue:
https://cc.callinfo.com/cc/playback/Playback.do?id=6mqc8k

GJH

It may indeed be foolish to hold stocks.

But it also strikes me as crazy to give up all possibility of ownership in publicly held companies.

Diversify well, including geographically/politically, with an emphasis on tangibles that can’t be stolen through paper games. And for stocks, follow Jim’s advice. My best guess.

michaelj007
michaelj007

I’d hate to get all brass tax n shit, but you can only own that which you can kill for. Sad but true. So grab a femur and start bashin’. Oooh Ahhh!

Billy-Bob Garcia
Billy-Bob Garcia

It’s all in your Brokerage Account Agreement! I finally read my Schwab Agreement, and there on page 55-56, it says that the funds in my margin account can be hypothecated and re-hypothecated and used by them. If I have no funds in the portion of my account that is a margin account it says that they can move funds from the regular account to the margin portion of the account. I talked to a broker and they verified this, but said any losses they’ll make whole…. yeah, right.

indialantic
indialantic

Congress and the House is eyeing private investor money. Congressional Bills in the works regarding 401(K) investor funds:

S. 1020: Savings Enhancement by Alleviating Leakage in 401(k)Savings Act of 2011

112th Congress, 2011–2012

A bill to amend the Internal Revenue Code of 1986 to modify the rules relating to loans made from a qualified employer plan, and for other purposes.

Sponsor: Sen. Herbert “Herb” Kohl [D-WI]
Status: Referred to Committee

http://www.govtrack.us/congress/bills/112/s1020

S. 1121: Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011

112th Congress, 2011–2012

A bill to amend the Internal Revenue Code of 1986 to modify the rules relating to loans made from a qualified employer plan, and for other purposes.

Sponsor: Sen. Herbert “Herb” Kohl [D-WI]
Status: Referred to Committee

http://www.govtrack.us/congress/bills/112/s1121

H.R. 3287: Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011

112th Congress, 2011–2012

To amend the Internal Revenue Code of 1986 to modify the rules relating to loans made from a qualified employer plan, and for other purposes.

Sponsor: Rep. Samuel “Sam” Johnson [R-TX3]
Status: Referred to Committee

http://www.govtrack.us/congress/bills/112/hr3287

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