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How many of you who own BRK shares have how many of them or let's better say what percentage of their total value registered in own name?
None
Less than 50%
More than 50%
All (just to be complete, without expecting anybody to vote that)

Click here to see results so far.

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Wow! (Up to now) Practically everybody fully trusting that in their jurisdiction in case of broker bankruptcies nothing ever can happen to their shares? I asked because I am just thinking about letting the part I am sure I won't "ever" sell register in my name instead of 'street' name, to be on the safe side.
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Wow! (Up to now) Practically everybody fully trusting that in their jurisdiction in case of broker bankruptcies nothing ever can happen to their shares? I asked because I am just thinking about letting the part I am sure I won't "ever" sell register in my name instead of 'street' name, to be on the safe side.

"instead of 'street name' ..." passed away with the dodo sometime ago. In street name usually was in the name of your broker or sometimes in the name of the broker through which your broker cleared. And messengers actually carried certificates from one to the other every day. That got pretty expensive and slow as traffic in shares increased. Now essentially all certificates are owned by Cede and Company and are registered to it. They all clear through the Depositary Transfer and Clearing Company (DTCC). So most people do not own what they think they own. Cede and Company own everything and your broker has only a beneficial interest in those shares owned by Cede and Company. And you have just a beneficial interest in the beneficial interest your broker has in those Cede and Company shares. So most investors are at the mercy of Cede and Company's underground vault on Water Street, and the records maintained by the DTCC, and then the records of those records maintained by your broker. And these days, with high-frequency trading by computers all over the world, what are the chances of a race-condition problem ending up with multiple beneficial owners of the same share(s) of stock? And if all ever tried to take delivery, some would get stiffed.

That is why I have taken delivery of my A-share certificates and they are in the safe deposit box at my bank -- not in a flood zone.
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Cede and Company own everything and your broker has only a beneficial interest in those shares owned by Cede and Company. And you have just a beneficial interest in the beneficial interest your broker has in those Cede and Company shares. So most investors are at the mercy of Cede and Company's underground vault on Water Street, and the records maintained by the DTCC, and then the records of those records maintained by your broker.

By using DTC's Direct Transfer System to let BRK shares register in my name I would not be at the mercy of Cede&Co. nor DTC nor my broker.

As I am the direct owner your multiple beneficial owners scenario can't happen, my broker can't lend or sell my shares wrongly or fraudulently in case collapse etc.

I would only be as you put it "at the mercy" of BRK's (as the share-issuing company) transfer agent who is maintaining their share registry for them.

Wrong?
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That is why I have taken delivery of my A-share certificates and they are in the safe deposit box at my bank -- not in a flood zone.

Is it Ant-safe?

According to the sage spread by Krishnamacharya, the founder of several Yoga styles, he did not invent Ashtanga Yoga but it's Thousands of years old. Proof: It's written down in an age-old book named "Yoga Korunta". Asked where this book is he replied "It was written on palm leaves and eaten by Ants".
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By using DTC's Direct Transfer System to let BRK shares register in my name I would not be at the mercy of Cede&Co. nor DTC nor my broker.

As I am the direct owner your multiple beneficial owners scenario can't happen, my broker can't lend or sell my shares wrongly or fraudulently in case collapse etc.

I would only be as you put it "at the mercy" of BRK's (as the share-issuing company) transfer agent who is maintaining their share registry for them.

Wrong?


I do not know if you are wrong or not. I think you would be safer than just leaving it at Cede and Company. I do know that my shares were registered at the Berkshire-Hathaway's transfer agent (Wells-Fargo at the time) but I understand it is different now (but I could be wrong).
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My directly-owned shares are also in a secure safe-deposit box - but are registered with "Shareowner Services" www.shareowneronline.com.

So there'e the certificate *plus* online verification of ownership

I found this out when I needed to exchange 30 of my B shares for 1500 post-split. That's where Berkshire instructed I send my certificate

--sutton
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I found this out when I needed to exchange 30 of my B shares for 1500 post-split. That's where Berkshire instructed I send my certificate

I know there are physical Berkshire certificates outstanding.
Do they still issue new ones?


Me, I just trust my broker.
Or brokers, actually. I keep half my money at each of two different brokers, largely for this kind of eventuality.

My appreciation based on reading historical examples is that the most likely risk when your broker goes under isn't losing your money as such,
but losing *access* to your money while the undertakers wind through the bankruptcy. And an inability to trade during that time.
Which could be a very long time indeed.
Outright loss is not impossible, of course, but very very much less likely.

Jim
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My appreciation based on reading historical examples is that the most likely risk when your broker goes under isn't losing your money as such,
but losing *access* to your money while the undertakers wind through the bankruptcy. And an inability to trade during that time.
Which could be a very long time indeed.


Do you consider this as a factor in your options strategies? Buffet said something like we should all invest as if the stock market will be closed for the next year. One problem would be holding Calls that expire during a period of inaccessibility during such a winddown.
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No. of Recommendations: 5
Do you consider this as a factor in your options strategies?

Yes and no.

No, in general. I live life on the ragged edge, trusting the brokers will stick around.
Trusting people are on average richer and happier and more productive than those that are too hesitant to trust.
I just wired some money to a company in Viet Nam run by people I've never met. It will probably work out fine.

But I have thought about what would happen.

Specifically, all in-the-money options get exercised on the next big expiration date.
This would use up all the cash in my account, and more.
This would likely breach the broker's margin limit (especially if they're wending their way through bankruptcy--no new loans),
triggering sales of some of my positions...most of which would be the freshly purchased Berkshire stock.
Which is exactly what I'd do anyway, if I wanted to reduce my implied leverage.
So...meh.

(at IB, for example, you can designate your preferred order of liquidation in case the poop hits the fan)

It's not a belts-and-suspenders way to run my life, but then again I still have money at the *other* broker.

Jim
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This is the reasoning I have for having our accounts at 5 different brokers. Even the smallest account is enough to tide us over if the SHTF.

Of course, in a major SHTF that takes _everything_ down then it doesn't matter, because nothing will be moving.

Same reason we have some money at local brick & mortar banks even though they don't pay squat interest.
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Isn't the first $500K (in US) insured by SIPC similar to FDIC for bank accounts?
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I know there are physical Berkshire certificates outstanding.
Do they still issue new ones?


Jim:

All I can comment on is two dates:

1) sometime after mid-2006 but prior to early 2009, I obtained paper stock certificates for some Berkshire.
2) in February 2010, I exchanged the 30-share stock certificate for an acknowledgment from Shareowner Services, i.e. with no new paper certificate forthcoming

So it's compatible with no new paper Berkshire stock certificates issued after around 2009 sometime.

-sutton
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All I can comment on is two dates:

1) sometime after mid-2006 but prior to early 2009, I obtained paper stock certificates for some Berkshire.


On 2014-07-23 I got three certificates for one A-share each. At first, I thought I might frame one and hang it on the wall, but when the time came, I did not dare do that; I put it in my safe deposit box at my bank instead.
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No. of Recommendations: 13
SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. Most customers of failed brokerage firms are protected when assets are missing from customer accounts. There is no requirement that a customer reside in or be a citizen of the United States. A non-U.S. citizen with an account at a brokerage firm that is a member of SIPC is treated the same as a resident or citizen of the United States with an account at a SIPC member brokerage firm.

SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.

https://www.sipc.org/for-investors/what-sipc-protects

SIPC protection of customers with multiple accounts is determined by "separate capacity." Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Accounts held in the same capacity are combined for purposes of the SIPC protection limits.

https://www.sipc.org/for-investors/investors-with-multiple-a...

My brokerage firm has excess SIPC insurance. How does that work?
Excess SIPC insurance is insurance provided by a private insurer and not by SIPC. The insurance is intended to protect brokerage customers against the risk that customers will not recover all of their cash and securities in the proceeding under the Securities Investor Protection Act (SIPA).

https://www.sipc.org/for-investors/investor-faqs#my-brokerag...

Additional brokerage insurance—in addition to SIPC protection—is provided to Charles Schwab & Co., Inc. accounts through underwriters in London. Schwab’s coverage with Lloyd's of London and other London insurers, combined with SIPC coverage, provides protection of securities and cash up to an aggregate of $600 million, and is limited to a combined return to any customer from a Trustee, SIPC, and London insurers of $150 million, including cash of up to $1,150,000. This additional protection becomes available in the event that SIPC limits are exhausted.

https://www.schwab.com/legal/sipc-account-protection
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SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm.

True as far as it goes. At one time I had an account at a financially-troubled SIPC-member brokerage firm, and the account was much less than $500,000. I forget the details, but it took around a year to get the shares the firm was holding for me in street name (in those days). Fortunately I was not a day trader and was not interested in selling them, or I would have been screwed.
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Client securities accounts at Interactive Brokers LLC are protected by the Securities Investor Protection Corporation ("SIPC") for a maximum coverage of $500,000 (with a cash sublimit of $250,000) and under Interactive Brokers LLC's excess SIPC policy with certain underwriters at Lloyd's of London 1 for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities.

https://www.interactivebrokers.com/en/index.php?f=2334&p...
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all my brokerage accounts are at Bank of America, which I deem pretty safe if not safest.
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It looks like you can still purchase real certificates for Berkshire B shares from framed share gifting websites like uniquestockgift.com or giveashare.com. If you look to give an AAPL share certificate, they say: "This company has currently opted for electronic ownership only. For this selection you will be shipped a high-quality REPLICA of the company's former stock certificate"
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Client securities accounts at Interactive Brokers LLC are protected by the Securities Investor Protection Corporation ("SIPC") for a maximum coverage of $500,000 (with a cash sublimit of $250,000)
and under Interactive Brokers LLC's excess SIPC policy with certain underwriters at Lloyd's of London
1 for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate
limit of $150 million.


Sounds good on paper, but I suspect that if the excrement hit the fan a cap of $150m wouldn't stretch very far.
I'm sure they have more than a dozen whales.

Though again, I think the more likely concern is the delay.
Mr Buffett urges us to imagine investment selection in the face of markets being closed for five years.
But I don't want to test that theory!

Jim
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During the credit crisis I did some digging and found out that all of the big brokerage houses have self-insured themselves, as a group, IIRC.

I contacted Fidelity to inquire about the reserves for this group insurance policy and was told that that was private info.

So, I sent our A shares to Warren for safe keeping. Later when asked about this kind of matter at an AM, Charlie IIRC said that street name WAS safe and doing more was overkill. Actually we returned our shares to Fidelity after the credit crisis seemed to wane.

After we got our shares back into our Fidelity account it seemed like something, "that was not worth doing well". At that time, the process was free. Now, it may cost you some cashola.

Having said that, was a long time ago.... so please feel free to comb your AM transcripts should you so desire.

It's all good.

jan

:^)
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“During the credit crisis I did some digging and found out that all of the big brokerage houses have self-insured themselves, as a group, IIRC.”

Good to know as I also have used Fidelity for 25+ years. Call me naive, but I have never inquired as to their coverage limits and “what if” scenarios. Thanks for the insight.
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Welcome.
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Later when asked about this kind of matter at an AM, Charlie IIRC said that street name WAS safe and doing more was overkill

What you say is super interesting for me because what Charlie said actually is the very reason why registering in own name regularly comes up in my mind!

As I thought to remember exactly the opposite, that Charlie once warned street name is not safe, not protected from event 'X' or 'Y', contrary to 'in own name' and therefore seemed to recommended registering in own name if one wants to be safe.

I therefore would be grateful if others know what exactly Charlie did say?
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