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Dreams: Maybe this will help you.
Stock Certificates - Do or Don't?
This should answer all your questions. It did mine.
Stock Certificates 101: To Order Or Not To Order?
Many CMKXers are questioning the holding of CMKX stock in certificate form or allowing the stock to remain in "street name" (held in the name of their broker).
This thread will help to understand these important questions. Various links are included, plus my brief overview of the subject.
The main incentive for resolving this question is to protect one against the possibility of his/her stock from having been "created" via naked shorting. The definition of naked shorting is:
"The illegal practice of short selling shares that have not been affirmatively determined to exist."
Remember, a NORMAL short sale involves the sale of stock that belongs to someone else. Whereas, a naked short sale occurs when a market maker (MM) sells stock that does not belong to someone else, and not exist, i.e., the MM creates "phantom" stock and then sells it to a buyer. The MM keeps the money for the "phantom" stock transaction.
The holding of stock certificates in your name protect you from the possibility of having the MMs, T/As and brokers --if things get tough for them-- from bailing and leaving you, the CMKX "shareholder," with just an electronic accounting --which might be blown away. Some say a monthly statement is proof enough that one owns the stock. Well, maybe. . The fact is MMs, T/As and brokers could go bankrupt and leave one holding "air". Some claim that the DTC or SIPC will cover any loss one might experience from MMs, T/As and brokers going bankrupt. I would ask, do you trust any government agency with the protection of your money? Therefore, the holding of certificates provides one with safety from such events.
However, as many have previously stated on this board, holding certificates does not allow one the ability to sell their stock at a moments notice; the certificates MUST be in the hands of one's broker before one can execute a sale. Therefore, either one takes the risk that all will be fine and MMs or T/As or brokers will eventually back any naked shorted stock, or one asks for a portion or all of their CMKX stock issued in certificates.
Please note: Stock Broker firms are, for the most part, NOT up to speed regarding the difference between legal shorting of a stock and illegal naked shorting. Therefore, if you read the post from the links below, and in these posts, various broker firms state that a stock in a "cash account" cannot be shorted, they are referring to legal shorting not naked shorting.
In addition, because of the length of Dr. D.'s writing, I have cut & pasted Dr. D.'s outstanding writing regarding stock certificates in the next post window below this window. IMHO, this is necessary read.
Dr.'s Writing Regarding Stock Certificates:
Certificates or Not Certificates
Some may think you are not capable of reading this for educational purposes so I okayed it by the Administrator for your reading enjoyment! I am not advocating getting certificates only educating on the facts!
Many are not very well versed on the actual ups and downs of having physical certificates for their shares of CMKX or even what they are. I hope this helps solve some underlying questions you might have.
Securities certificates in a basic definition are the written evidence of the ownership of shares of stock in a particular company. Certificates by their very nature are valuable because they are negotiable instruments like checks that can be drawn on a bank. Certificates are issued by the company, acting as its own transfer agent, or by an outside "transfer agent."
As an investor, you have up to three choices when it comes to holding your securities:
Physical Certificate — When you own the physical certificate for your CMKX stock it is registered in your name on the issuer's books whether it is the company, a Transfer Agent, or brokerage firm and you receive an actual printed stock certificate representing your ownership of the CMKX shares.
"Street Name" Registration — Your CMKX shares are said to be held in “Street Name” when your CMKX shares are registered in the name of your brokerage firm (the brokerage firm is the “Street” for all investor clients in their brokerage firm creating the metaphor as being for all clients that live on that “Street”) on the issuer's books, and your brokerage firm holds the CMKX shares for you in "book-entry" form. "Book-entry" simply means that you do not receive a physical certificate for your CMKX shares but instead your broker keeps a record in its books that you own a specific amount of CMKX shares.
"Direct" Registration — Another form of holding for your CMKX shares is what is referred to as “Direct Registration”. You can choose to have your CMKX shares registered in your name on the issuer's books, but permitting either the company or its transfer agent to hold all CMKX shares for you in book-entry form. One benefit of this is that "Direct Registration" can allow you to transfer your CMKX shares that you hold to another investor.
There are some advantages to having your certificates
of CMKX:
The advantages of holding an actual certificate include:
1. CMKX knows exactly how to reach you and will be able to send all company reports and other information to you directly without you waiting for the information to trickle down through other sources. This also insures the validity of the information to you.
2. If you need some extra money and decide to go to the Bank or Loan Company you will probably find it a lot easier to offer your securities as collateral for a loan if you are holding the actual certificates yourself in physical certificate form and can present them at the time of the Loan processing.
3. If you plan on holding long on CMKX or any other security, certificates make this easier because of the time and steps necessary to get them back into the market.
4. If a naked short sell position is affecting the security (such as CMKX) this will secure your holdings in the company in case of a failure of the market makers to deliver or the brokerage firms to complete the naked short sell and fail delivery on your security!
The disadvantages include:
1. One of the most obvious drawbacks to holding the physical certificate for your CMKX stock is when you want to sell your stock. If the price gets right for you to sell it could pass before you can get in a position to sell. Why? Simply put, you will have to send the actual certificate to your broker or the company's transfer agent and it has to go through their channels before you can actually execute the sale. This may make it impossible for you to sell your position quickly if you need a fast out for the process can take a few days to several weeks to accomplish.
2. If for some unseen reason you happen to lose your certificate, whether it is never received in the mail, destroyed by fire, water, stolen, or simply misplaced or lost you may be charged a fee for a replacement certificate. Although if the lost or stolen certificate is reported quickly there is a chance there may be no fee at all.
3. A not so difficult downside although needing to be mentioned is the fact that if you happen to be doing well, buy a new house and move, then you will have to contact the company with your change of address so that you do not miss any important information they may be trying to mail to you. This is not updated automatically and you will have to contact them to update the current address information.
Additional notes to consider for those that are concerned about the possibility of a lost or stolen certificate. If you discover that your physical certificate for CMKX shares are lost, accidentally destroyed, or stolen, you should immediately contact the transfer agent or a broker-dealer and request that a "stop transfer" be placed against the missing shares of your CMKX stock. The "stop transfer" is an important step in protecting your ownership interest in your CMKX shares and will prevent a person who improperly has possession of the certificate from having the ownership transferred to his or her name.
In addition, the transfer agent or broker-dealer will notify the SEC's lost and stolen program of the missing, lost or stolen stock shares. This notification reduces the likelihood that people can traffic in stolen securities because broker-dealers and banks can inquire whether securities presented for sale or as collateral for a loan are reported as missing, lost or stolen.
If you are expecting receipt of a certificate through the mail, and it doesn't arrive, you should immediately contact the institution that arranged the transaction, this is typically your broker-dealer. Many transfer agents, banks, broker-dealers and corporations choose to use registered or certified mail to deliver stock certificates to individuals, but there is no specific Federal requirement that they do so, and some prefer regular mail so as not to call attention to the potential value of the item. A certificate lost in the mail can usually be replaced without cost to the owner if the loss is reported promptly.
Part 1 of 2
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