Dear Friends,
I respectfully ask all of our readers to either take delivery of your paper certificates or become book entries on the book of the non-financial entity transfer agent for all of your junior mineral industry company shares. The latter is best for anyone who has a somewhat difficult time keeping track of things.
Those of you using margin accounts are, as a product of that, allowing your brokerage firms to lend your shares to other brokers to cover short sales of your company.
Two goals are accomplished by the above. First and foremost it eliminates any financial agents between you and your shares. The second thing it does is make it more difficult for those who have played the short side of all mineral companies.
You would make the management of your company's job easier if you would consider doing this.
Thank you,
Jim Sinclair
Dear Jim,
As you probably know, publicly traded companies are required to offer book entry registration of shares via the Direct Registration System (DRS). When shareholders request their shares be registered as a book entry, they become registered shareholders and clients of the company's Transfer Agent.
Computershare sends statements to clients (shareholders). If a book entry registered shareholder wishes to negotiate their shares, they can request from Computershare the linked below DRS Direct Transaction Form. Once the form is completed and returned to Computershare, the shares can be negotiated as they request. Other transfer agents have similar forms for their respective companies.
I trust this is helpful to some of the CIGAs,
CIGA Helen
Click here to view Computershare?s DRS Transaction Form in PDF format
2.
Voting rights on MARGIN ACCOUNTS and shorted shares
Posted by: TheChief on August 04, 2008 05:05PM
Be careful if you hold ARU in a MARGIN ACCOUNT as this affects your voting rights......READ BELOW:::
The registered owner of the security, known as the holder of record, is the investor who retains voting rights. This means the holder of record is entitled to vote on any corporate action that is decided upon by shareholders. When it comes to short sales, the problem that arises is determining who is the holder of record on the shares being shorted.
To understand the flow of voting rights, it is important to first understand the short sale transaction itself. Shares that are available to be shorted come from three sources: the brokerage firm's inventory, another customer's account, or another brokerage firm. The only shares that can be taken from other customer accounts are those from margin accounts. When opening margin accounts, investors enter an agreement with the brokerage firm that their shares can be loaned out, but they still maintain their position in the security.
The short sale transaction starts with the investor inputting an order to short the shares by calling his or her broker or entering the trade online. The brokerage firm then finds the shares from one of the aforementioned three sources and sells the shares in the market; the proceeds are transferred to the account of the investor going short. The position is then closed out when the investor repurchases the equivalent amount of shares and they are returned to the brokerage firm.
To understand who is the holder of record, and thus who retains the voting rights, you just need to follow the shares. Initially, the shares are held by one of the three sources. Whichever source initially held the shares was also the holder of record. When the shares were used in the short sale transaction, the initial source lost its voting rights as it was no longer the holder of record. Even the margin account customer who holds the shares long will lose his or her voting rights in this situation - this is part of the margin account agreement.
The shares are then sold in the market, and the investor who purchases these shares becomes the holder of record for these shares, thus controlling the voting rights. The investor going short does not get the voting rights. When this investor closes his or her short position, the shares are returned to the brokerage firm, and the voting rights return to the initial owner whose shares were used in the short sale
3.
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Dear CIGAs,
- Protection of your hard earned assets is the first and foremost needful exercise.
- Investment of those assets is the secondary consideration. What good is an investment if it is unprotected from financial agents.
- Gold must not be approached as a speculative vehicle in which you want to make a killing. If you approach gold in that fashion it will be you who will be killed because of its volatility.
- Gold is a currency. All the analysis, questions you ask me and handholding I willingly do sit directly on that correct definition. This understanding is the route to answering your entire question and almost every foolish article you inundate me with that fails to see that.
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To protect your retirement accounts you have two avenues of approach.
a. You request direct registration as a book entry at the transfer agent, naming your trust entity and your retirement account name. This creates what equates to a check requiring two signatures and thereby assures a fast settlement and payout by a bankruptcy judge.
b. You require your trust agent to assure you that your IRA is held in a true custodial form. That means the assets of the retirement account are segregated to your IRA account name and is not part of the balance sheet of the financial agent. If those assets are in the nominee name of the Trust agent your assets are on their balance sheet.
- Physical gold is insurance. If some financial agent is holding physical gold for you in any form you have violated the insurance characteristic. What you do not have in your hand or safety deposit box is not insurance.
- Do not send money to or deal with anyone you cannot find. The scams in gold are prolific and transparent to a professional like me.
- Any entity that offers to help you violate the law will certainly violate you before you get a chance to break the law.
- Any entity that, as a main attraction, offers you gold somewhere outside of your domicile that is difficult to see and touch probably has taken your money and you have nothing to worry about. The reason you have nothing to worry about is you have nothing.
- Share investments in precious metals entities can be protected three ways. The first is to take paper delivery of your shares where available. The second is by you ordering direct registration as a book entry at the transfer agent. Third is that you keep your shares at a financial agent that offers true custodial accounts. **Note - Canadians cannot get direct registration at the transfer agent for Canadian entities. We are working on that.
- All those holding Swiss, Euro and Cando short-term treasuries in their accounts as true custodial form need to take one more step. That is to firmly ask if the broker holding these assets are certain that the depositories for the broker have provided your broker themselves with true custodial form.
This is a systemic problem where we may need to build new forms of protection to rest comfortably. We must be sure that our broker has protected itself (the brokerage house or bank) in order to protect you when offering true custodial accounts.
Each link in the chain of ownership must be firmly segregated, not held in nominee form.
Settle for nothing less.
Keep in mind:
- Gold is going to $1200 this year.
- Gold will trade at $1650 on or before Jan. 14th, 2011
- The US dollar will trade at .6200 and .5200 USDX.
- The Euro will trade at $2 or better simply because it is the large cap not-dollar.
- None of the above is worth anything to you if you fail to protect yourself against the broken financial system right now.
Respectfully yours,
Jim
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