How Can You Confirm Ownership of US Shares from Australia?

orangetrain on 05/02/2021 - 15:54
Last edited 05/02/2021 - 15:55

I was looking at terms of Aus brokers with US shares and the shares appear to be owned by brokers according to their terms at SelfWealth/Phillip Capital and Commsec/Pershing except only as beneficial ownership for buyers.

They go on to state that your shares will be put in this pool of other shares. But if you put in the order to sell/transfer, they may not be able to execute your request if the pool does not have enough shares??? Sure, I could sue but I'm not made of money.

It was easy to confirm ownership with ASX CHESS, but there appears to be no way to check my US shares. They could get stolen, loaned out or misplaced by broker/custodian and I wouldn't know until I execute the order.

For those of you that got US shares, how do you have proof that your shares are protected?

Financial

Comments

  • HeavenlyHammocks on 05/02/2021 - 16:11
    +1

    US doesn't have CHESS, that's why they use a large/old custodian like Phillip Capital.

    • orangetrain on 05/02/2021 - 16:53

      What's stopping Phillip Capital from doing something with your shares? A pinky promise not to touch it?

      If we're talking legally allowed, their terms say they could use your shares to cover the costs of the agreement. Does this sound like they could loan out your shares and keep the interest?

      • whooah1979 on 05/02/2021 - 20:06

        They can do what they want as long as it isn't unlawful.

        It all comes down to what the SEC will do if they find out.

        • orangetrain on 05/02/2021 - 22:24

          That's a big "if" there! So you're saying as I continue to be oblivious, they could be making money off my shares?

          Even if caught, does SEC have teeth?

  • Kenb0 on 05/02/2021 - 17:55
    +4

    You're overthinking it. CHESS is an Australian-specific thing, no other country has anything like it so if you want to trade shares anywhere outside of Australia(not just US), you'll have to make your peace with the custodian/nominee model of ownership.

    The only thing you can do is check that the custodian they're using is a big company who's been in the business for a long time, rather than some fly-by-night outfit operating out of a strip mall in rural Indiana. Typically these custodian companies are divisions of major global banks, I've seen the following as common custodians: Citigroup, JPMorgan, BNP Paribas, Barclays, Deutsche Bank

    • netjock on 05/02/2021 - 20:23

      Also the reason why trading fees is so expensive in Australia.

    • orangetrain on 05/02/2021 - 22:44
      +1

      I looked up those custodians you listed for securities fraud:

      Citigroup: https://www.yahoo.com/entertainment/s/citigroup-pays-180-mn-…

      JPMorgan: https://www.justice.gov/opa/press-release/file/1320576/downl… (DOJ, CFTC and SEC Settle Spoofing Fraud Charges with JP Morgan for $920 Million)

      BNP Paribas, only AML though: https://www.finra.org/media-center/newsreleases/2019/finra-f…

      Barclays, mortgage fraud: https://www.bbc.com/news/business-38410704 (US alleges Barclays mortgage securities fraud)

      Deutsche Bank: https://en.wikipedia.org/wiki/Deutsche_Bank#Controversies

      Lets go further!

      Phillip Capital (SelfWealth picked this one!): https://financefeeds.com/cftc-fines-phillip-capital-violatio… An example of where they won't tell you if something happens to your shares.

      Pershing: https://www.afr.com/companies/financial-services/bny-mellon-… (The firm had pleaded guilty to multiple breaches of the Corporations Act by transferring the proceeds of client trading activity from trust accounts to its own private bank accounts…)

      I don't know about you, but I'm not going to trust any of the US Brokers. Hence why I'm asking how US securities holders go about ensuring they control the sock.

      • Kenb0 on 05/02/2021 - 23:25
        +1

        Ok…and the answer to that, is “they don’t”. If you’re not going to trust any of the US brokers, then you won’t be able to trade, full stop. They’re not exactly struggling for customers these days so no one is going to bend over backwards and go away from their normal processes to get your trades.

        I didn’t go through with a fine tooth comb on any of those links you posted on the custodians I listed but my skim read of them doesn’t reveal anything negative about their custodian handling of equities for brokers, which is what we’re worried about, yes? These are multi-billion entities with thousands of employees worldwide, lots of shit happens in departments completely unrelated to their custodian services.

        Every year, a bank manager or two from one of the big 4 banks will get done on fraud charges for home loan fraud, embezzling, etc. Do you then pull all your money out of that bank and refuse to deal with them from then on even though it doesn’t directly affect you?

  • plmko on 05/02/2021 - 19:28

    Order some paper certificates. Although they usually cost around $500 these days.

    • orangetrain on 05/02/2021 - 22:45

      Which broker stated this?

  • JimmyF on 05/02/2021 - 21:12

    How Can You Confirm Ownership of US Shares from Australia?

    I log into my trading account and the shares are listed :)

  • dogboy on 05/02/2021 - 23:10

    Buying US shares from AUS just sucks. First you have to deal with the exchange rate and fees, then exorbitant fees for each trade and then having to pay the exchange rate again to get your money. Why does it have to be so hard :(

    • JimmyF on 06/02/2021 - 09:36

      nabtrade is pretty cheap on the fee front for trades etc. Exchange rate isn't too bad either.

      The website sucks badly as you have to use the mobile website to place a conditional trade order though and unlike others it tracks your USA shares in pure USD, so you have to keep track of the AUD cost and do some calcs for the 'true' status as the dollar moves around.

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