South Florida Arbitration & Litigation Lawyer Blog
Street Name Registration – Securities Ownership:
This post is designed to provide the reader with a general description of securities ownership through street name registration. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. Thus, this post should not be relied upon as providing legal or investment advice. If you have any questions concerning this post, you should consult a qualified professional.
You may have your security registered in street name and held in your account at your broker-dealer. Many brokerage firms will automatically put your securities into street name unless you give them specific instructions to the contrary. Under street name registration, your firm will keep records showing you as the real or “beneficial” owner, but you will not be listed directly on the issuer’s books. Instead, your brokerage firm (or some other nominee) will appear as the owner on the issuer’s books.
While you will not receive a certificate, your firm will send to you, at least four times a year, an account statement that lists all your securities at the broker-dealer. Your broker-dealer will also credit your account with your dividend and interest payments and will provide you with consolidated tax information. Your broker-dealer will send you issuer mailings such as annual reports and proxies.
The advantages of letting your brokerage firm hold your securities in “street name” include:
- Because your securities are already with your broker, you can place limit orders that direct your broker to sell a security at a specific price.
- Your brokerage firm is responsible for safeguarding your securities certificates so you don’t have to worry about your securities certificates being lost or stolen.
- Your brokerage firm may keep you informed of important developments, such as tender offers or when bonds are called.
- It is easier to set up a margin account.
The disadvantages include:
- You may experience a slight delay in receiving your dividend and interest payments from your brokerage firm. For example, some firms only pass along these payments to investors on a weekly, bi-weekly, or monthly basis.
- Since your name is not on the books of the company, the company will not mail important corporate communications directly to you.