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It is not normal practice in the UK for nominees to arrange for copies of accounts and other shareholder communications to be sent to the beneficial owners of the shares. The UK Shareholders
Association published a list of the perceived disadvantages for UK customers of nominee accounts compared with
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transactions and be unable to replace the shares if the investment firm becomes insolvent. The UK Financial
Services Compensation Scheme compensates investors on the failure of an investment firm. However the limit in June 2015 stood at £50,000 per person per investment firm and losses above this
63:, is typically the largest stockholder of a company. In the US where Cede & Co. is the street name holder, therefore, all beneficial rights such as voting rights and dividends flow first to the nominee holder Cede, and then are passed onward, and ultimately to the beneficial owners. In the
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and other communications are sent to the stockbroker rather than the beneficial owner. The extent and methods for handling this can vary considerably between brokers. Failure of the stockbroker or bank to pass on shareholder rights and communications to the beneficial owner is one of the major
48:. The entity whose name is recorded as the legal owner of the securities is known as the "nominee owner," and that entity has ownership rights in the security. The nominee owner holds those ownership rights on behalf of the true economic owner who is referred to as the
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Because investment firms offering nominee services are the legal owners of the shares, there remains a risk of improper behavior causing the shares to be lost. For example, the investment firm may use the shares it holds for
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205:. Unable to identify the actual beneficial owners, protestors intimidated the employees of the stockbroker firms instead, to discourage them from handling such shares.
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as registered shares, where the company maintained a register of owners of shares as well as issuing share certificates, and changes of ownership were registered, or
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amount would not be covered. This risk of the shares being lost through malfeasance does not apply when the shares are held by the investor in certificated form.
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Because the shares are held in the name of the stockbroker or bank or custodian the name of the beneficial owner does not appear on the
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The anonymity of nominee accounts facilitates ownership of shares in controversial companies by individuals. For example, when
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The
Depository Trust Company: DTC's Formative Years and Creation of the Depository Trust & Clearing Corporation, (DTCC)
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The popularity of nominee accounts, which have existed for over a century, has increased rapidly since the introduction of
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As well as the terminology differing between countries, the commercial practice also differs from country to country.
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periods and lower commissions than certificate deals. They often enable domestic small investors to gain access to
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as bearer shares, where ownership was transferred simply by handing the bearer share certificate to the new owner.
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protestors threatened shareholders of pharmaceutical laboratories involved in testing on animals, such as
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Article 8 provides for a system of heavily intermediated securities holding where transfers are by
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share dealing in the late 1990s and in some cases stocks can only be held electronically, such as
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Before the use of electronic technology, all shares were held in certificated form, either
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are opposed to their use. During 2006 the UK government passed an amendment to the
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and stock certificates are registered in the name of a designated nominee entity.
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397:, The United Kingdom Shareholders' Association. Retrieved 30 November 2006.
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or "nominee name securities" is used in the United States to refer to
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complaints against nominee accounts and is a reason why in the UK
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certificated ownership or direct electronic ownership (CREST).
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of companies which are held electronically in the account of a
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As with direct electronic registration, nominee accounts make
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Balotti, R.F.; Finkelstein, J.A.; Williams, G.P. (1995).
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as amended, which was enacted by the State legislatures.
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There are three principal ways of holding securities:
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Regarding nominees who are the registered owners of
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telephone and internet trading possible with faster
536:"Investment Limits - Find out if you are Eligible"
453:, 9 February 2001. Retrieved on 30 November 2006.
395:Policies - Share Certificates, Nominees and Crest
383:United States Securities and Exchange Commission
416:, 25 July 2006. Retrieved on 30 November 2006.
434:, 22 May 2006. Retrieved on 30 November 2006.
190:which gave nominee shareholders more rights.
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510:"Find out when Deposit Insurance is Covered"
184:The United Kingdom Shareholders' Association
385:, 03/04/2003. Retrieved 30 November 2006.
111:As a "direct" electronic registration in
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379:Holding Your Securities - Get the Facts
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494:: CS1 maint: archived copy as title (
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317:. Wolters Kluwer Law & Business.
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275:Omnibus Customer Securities Accounts
44:or bank or custodian, similar to a
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445:Lab protestors target stockbroker
426:Glaxo investors ask for anonymity
408:Big deal for nominee shareholders
224:Article 8: Investment Securities
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314:Meetings of Stockholders
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144:contracts for difference
61:Depository Trust Company
228:Uniform Commercial Code
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182:organisations such as
34:street name securities
241:In the United Kingdom
83:exchange-traded funds
568:Securities (finance)
214:In the United States
180:activist shareholder
406:Oldham, G. (2006),
443:Curry, D. (2001),
285:Securities account
188:Companies Act 1985
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32:The phrase
562:Categories
291:References
220:securities
132:settlement
38:securities
364:8 January
330:8 January
163:dividends
128:paperless
490:cite web
450:BBC News
431:BBC News
413:BBC News
259:See also
140:warrants
138:such as
79:Internet
546:26 June
520:26 June
480:25 June
226:of the
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152:margin
474:(PDF)
467:(PDF)
167:perks
148:order
117:CREST
548:2015
522:2015
496:link
482:2015
366:2017
353:ISBN
332:2017
319:ISBN
201:and
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