Anonymous
Anonymous asked in Business & FinanceInvesting · 1 decade ago

How can a stock be stolen?

I happened across http://www.answers.com/topic/hot-stock-1 and saw the definition for a hot stock. I was kind of surprised because I never imagined it would be possible (given the number of sophisticated brokerages and how they handle transactions). The person that can describe what is meant by this definition (and give me an example or two) gets the best answer.

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  • 1 decade ago
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    This makes no sense whatsoever.

    The link posted is not logical nor accurate.

    A stock does not get "stolen" unless for example, one has a stock certificate say in their residence, and they residence gets broken into (burglarized) and the criminal(s) takes the certificate.

    This would be stupid for the criminal(s) to do this because they cannot cash the stock certificate ANYWHERE.

    The cert only can be deposited, then sold (after verified by the transfer agent) or collateral also deposited in the account [such as cash (not physical cash), or other validated and wholly owned securities, and or meeting required margin subject to compliance approval].

    The cert cannot be traded in for cash.

    One MUST have proof of identity who's name appears on the cert and a "medallion stamp" that guarantees the signature of the true owner.

    "Signature Guarantees: Preventing the Unauthorized Transfer of Securities"

    http://www.sec.gov/answers/sigguar.htm

    It should also be noted that one will not be able to "forge a signature on a stock certificate" successfully as the person making the deposit of the securities will have to:

    (1) Show a valid photo gov issued ID, maybe 2 forms to the broker/dealer.

    (2) Have a medallion stamp.

    (3) Open an account disclosing their name and SS#, and other relivent info including address.

    -- SEC Rule 17a-3(a)(17)l

    -- SEC Rule 405, et al.

    http://www.sec.gov/rules/final/34-44992.htm

    (4) The transfer agent will verify this info based on the address, SS#, name, etc that was on the original record.

    The crime for doing this act would move to multiple felonies, including but not limited to (a) (attempted) money laundering, (b) forgery, (c) theft/ burglary. (d) fraud. Depending on the value of the securities that could also be a felony.

    http://en.wikipedia.org/wiki/Felony

    The odds of this happening is extremely low, like Obama walking on water.

    And there would be the above extensive paper trail to catch the criminal, and would be reported.

    -- Section 356 of The Patriot Act

    http://www.sec.gov/about/offices/ocie/aml2007/nyse...

    Source(s): --- Fmr Securities Compliance Officer/ Registered Principle (see bio) --- Experience identifying financial fraud. Worked with/ reported related to compliance, in-house legal, and federal law enforcement.
  • 1 decade ago

    Many people own stock certificates that are not held by brokerages. (It is not too unusual for someone to find old stock certificates among the papers of a deceased relative.)

    By forging the signature of the stock owner on a stolen certificate and contacting the transfer agents a thief can have the ownership of the certificate transferred, creating a hot stock.

    Source(s): I have several times read warnings about holding on to stock certificates instead of holding the stock in a brokerage account.
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