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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
Home / Personal Finance / Financial Planning
Friday, July 25, 2008
Four Ways To Maximize The Benefit Of Reward Credit Cards
Marshall Loeb
MarketWatch
NEW YORK--While rewards credit cards can be rewarding, it really depends on how you use them. Many consumers can get caught in rewards traps, and end up with little or no advantages at all.
From Consumer Reports magazine, here are four tips for how to use reward cards so that you benefit:
Run the numbers. Before choosing a card, estimate your spending and translate that into how much cash back or points you'll earn through the program. Once you have that number in mind, find out how many points you'll need to qualify for something you want. If your spending doesn't get you anywhere close, you'll do best to forget about that card. Think twice about rewards if you carry a balance. Rewards credit cards often charge relatively high interest rates. These will cut into your reward if you carry a balance. Card companies may also suspend your points if you don't pay up on time. Be wary of charity cards. Charity rewards cards give your rewards to a charity, but the amount turns out to be minuscule. Most cards only pay between 25 and 50 cents per every $100 you spend. The other downside of these cards is you can't write off the donation on your taxes. You'd be better off looking for another card and donating directly to the charity. Use your miles. If you've racked up a considerable amount of frequent flier rewards, you should use them as fast as possible. Cashing them in has become more difficult as airlines have cut back on flights. They are also known to change the rules frequently. Hang on to these rewards for too long and you risk losing them.
Copyright © 2008 MarketWatch, Inc.
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