You Don’t Own Your Stocks and Bonds

https://rumble.com/v40sifh-the-great-taking.html                                                                                       The Great Taking.  David Webb.

UCC (Uniform Commercial Code) statutes were changed is all 50 states between 1994 and 2004.  Previously, for 400 years, stocks and bonds were personal property. You bought it, you owned it.  If the broker you used to buy the security went bankrupt, the security was transferred to you, intact.  

The UCC statutory changes gave title to the security to the broker/dealer - you do not own the security, but you do have a contractual claim to its value.  Ownership of the security is now subject to the rules of  contract law.  You now merely purchase a “security entitlement” when you buy a stock or bond from a broker.  

If/When the broker/dealer goes bankrupt, title to the stocks and bonds that you though YOU own are now tied up up in the bankruptcy…. Because the broker/dealer is the legal owner of these assets.  You only have a claim of ownership under contract law, or  “beneficial ownership”.  Once the “secured creditors” are paid, the bankruptcy court may reimburse you with a pro-rata share of the security’s value.  All of these changes were put in place when bankruptcy laws were revised in 2005.

(Willkie, Farr & Gallagher, a big-ass law firm, issued a memorandum in 2008 regarding the Bear-Stearns bankruptcy.  It explained that new statutes prevented a “stockbroker” or “commodities broker” from filing Chapter 11, which allows reorganization of a bankrupt entity’s finances.  Only Chapter 7, liquidation, was possible.  Thus, J.P.Morgan bought Bear-Stearns for $2 a share.)

You should know that the securities you buy from a broker are held in a pool.  The only entity who knows that YOU bought the security is the broker/dealer.  There is no stock certificate or bond in existence with your name on it.  These are “book entry” or “paperless” securities.  The securities are said to be held in the Street Name.  (As in “Wall Street”!)  And in the event of the Custodian’s insolvency, you are entitled to recover only a pro-rate share of your investment.  

Even in the event of fraud, the secured creditors recover their losses before you, the purchaser of the security, is compensated.  This change in bankruptcy law was enacted in 2005.  “Safe harbor” protected bankruptcy trustees from fraudulent transfer of client assets to creditors.  The failure of Lehman Brothers cemented this principle into case law.  J.P.Morgan was both the custodian and the secured creditor who took client assets.  Prior to 2005, this would have been a fraudulent taking. The opinion from the U.S.D.C. Bankruptcy court distinguished Morgan as a member of the “protected class” of secured creditors, who was entitled to take client assets because, basically, they were too big to fail.

The Depository Trust Company (DTC) actually OWNS all securities in the U.S.  It is valued at $542 trillion. All broker/dealers and custodians transfer their holdings to the DTC, in pooled form.  Only the broker/dealers and custodians have a record that YOU made a purchase.  The DTC, the legal owner, has no such record.  In European countries, the equivalents of the U.S.’s DTC are the Central Securities Depositories (CSD), which roll up to EuroClear in Belgium.  In 2014, an international clearing house was created, joining the DTC and the CDS. This permits virtually instant transfer of assets if required to maintain solvency of large institutions.  This international clearing house also maintains derivative contracts, thus, the huge $542 trillion number.

The Central Clearing Party (CCP) is is the international clearinghouse for all derivative trades, and the counter party on all derivative contracts.  One no longer knows the credit-worthiness of the counter party to one’s contract. There are plans for what happens if the CCP fails, i.e., how to “reset”.  The old system will not be “fixed”.  A new system will be created.

(Catherine Austin Fitts will be releasing an interview with David Webb in January. Catherine is not in complete agreement with David’s analysis of the situation.  I can’t wait to hear.  ALSO, David Webb’s .pdf of “The Great Taking” has more detail than the documentary film linked above.  You can find a free download of the .pdf at https://thegreattaking.com/  David is a retired hedge fund manager.  He relates his history and experience in the first portion of the film.  He left the U.S. and now resides in Sweden.)