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Buying Shares online

  • 02-01-2009 4:46pm
    #1
    amacca
    Registered Users, Registered Users 2 Posts: 7,201 ✭✭✭


    Hi,

    I'm thinking of buying shares using some of the american online brokers such as ameritrade, zecco, scottrade etc.

    I know there is a certain amount of risk involved in investing in shares but what Id really like to find out is what level of protection an investor has in the event of one of these online brokers going bankrupt.

    ie: lets say I had invested in various shares and had a small portion of my investment in a cash account with one of these brokers and they folded up, would I be able to reclaim my money or even a portion of it?

    What Im really asking is would you be able to chase your money, would it cost much to reclaim it or do I worry too much and is your money safe (with the exception of any losses that might occur because of poor choices when buying the shares themselves) ?

    Does anyone know if this has this happened before with an online broker and if so what happened to its clients?


    Regards, any help appreciated.


Comments

  • #2
    radioactiveman
    Closed Accounts Posts: 324 ✭✭radioactiveman


    You could get certificates for the shares to prove you own them and also make sure you're listed on the companies' lists of shareholders


  • #3
    amacca
    Registered Users, Registered Users 2 Posts: 7,201 ✭✭✭amacca


    Tks radioactiveman, hadnt fully thought about that angle.

    Had thought about the shares certificate and decided on a paperless account as all these brokers charge money every time they issue share certificates and account statements. And that could eat into any profits I might make on the account.

    However Ill do some research on being added to the share register to see if the low cost online brokers do this (for a charge) or if it happens automatically....anyone out there know?


    Seems like I have two and probably more questions now..


    Does anyone know how hard it would be to chase your money if one of the american online brokers folded up and you had to use the american investor compensation scheme they operate under (would it even apply to overseas investors or would it be prohibitively expensive to use)


    When you trade a paperless account with one of these online brokers are you automatically added to share registers of the companies you have bought shares of. Is it easy to claim your shares in the event of your broker folding up?

    Once again tks.


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