Nominee accounts for shares

[gerry15]

Now that the Morrough case has been put to bed I am wondering if any new light can be shed on Nominee or Crest Accounts since Brendan last updated his views on the subject in 2003.
It is clearly impractical to trade shares that are held in certificate form.The Morrough case shows that shares held in a nominee account are fair game for the liquidator of an insolvent stock broker's business.
The position with personal Crest accounts seems to me to be unclear as some say that they can, apparently, be raided by the sponsoring stock broker without the client's knowledge- so what's the solution?

 

[Brendan Burgess]

There is no solution if you want to trade i.e. buy and sell regularly. You just have to take those risks.

If you are investing, i.e. buying and selling for the longer term, then you should get certificates.

Brendan

 

[Ravima]

Personally, I think that CREST is the better way to go. The shares are registered to you, kept in your name and you get all the correspondence diret from the company.

Your broker should let you have a statement at least once a year confirming your holdings and if you are worried, you can always email the registrars to confirm.

if you are worried about the broker stealing your shares, then there is nothing I can tell you to alleviate your worry. Only you can sort that out. Why do you not trust him? If there is no trust, then the relationship is flawed. If your holding is raided by a rogue broker, then you have some protection from the compensation fund. If a rogue broker in a large firm, the firm may cover the losses to avoid bad publicity.

Morrogh case showed the danger of holding shares in nominee account. For what it is worth, I think the decision of the High Court was wrong, but then I am not a lawyer or judge.

 

[gerry15]

Thank you Brendan, thank you Ravima.
As regards being "worried about my broker stealing my shares": I have to say that I have no reason to distrust my broker but then, neither did the clients of Morroughs!