How Safe are Nominee Accounts

MIKELSOK

Not sure if this has been covered elsewhere but here goes'

How safe are Nominee Share Trading accounts? given that any shares you hold in a Nominee Account are not in your name. So if like your online dealer was to go bust how do you;

1. Prove that you are the rightful owner of the shares you have purchased. Presumably means keeping a copy of all contract notes??

2. What is the limit of compensation?

Aegis

Held in a Nominee account basically means that the rights to the shares are held in trust for your benefit and are ring-fenced from the company's assets. Their records will show you as the ultimate owner, so if the company goes bust the shares will be assigned directly to you and will not form part of any liquidation of company assets.

Compensation is only a valid worry, therefore, if the company goes bust while you are holding a lot of cash in your client account, and that shouldn't be a problem because they're likely to use a specific client settlement account which should again not form part of the company's assets.

Jake'sGran

Maybe I should have done this as a separate thread but I just wondered if I am right in thinking that selling shares that one holds in certificate form are more expensive to sell. I still have a few of these and also have shares I bought through The Share Centre, i.e. nominee.

Rollinghome

Jake'sGran wrote: »

Maybe I should have done this as a separate thread but I just wondered if I am right in thinking that selling shares that one holds in certificate form are more expensive to sell. I still have a few of these and also have shares I bought through The Share Centre, i.e. nominee.

Some charge a whacking extra £25 for certificated holdings. Normally cheaper way is to transfer the certificates into their nominee account, which is generally free, then sell.

Having to hold shares in nominee accounts makes nonsense of that shareholder democracy we were promised that would hold directors to account.