EasyEquities TFSA query

[Toothless]

Here is a nice article on how they work:

http://www.moneyweb.co.za/uncategorized/how-does-easy-equities-work/

It all sounds above board, no issues, but I do not like the fact that shares are registered in their name and not mine. So, for larger investments, I will always use PSG. I do not wish to be caught up in any litigation to get my money or even part of it back should anything happen to the company.

I still think EE is fantastic, especially in regards to pricing, for very short-term and small investments.

Just take a look in the news about all these previous investment schemes / companies that went belly-up. Executors are appointed, assets seized, later sold off and the money is then distributed between all investors and debtors. Many usually lose large amounts of money and recover only a fraction of their investments. This is a real problem any investor faces should the company 'owning' the shares go south.

 

[Deleted member 83147]

Here is a nice article on how they work:

http://www.moneyweb.co.za/uncategorized/how-does-easy-equities-work/

It all sounds above board, no issues, but I do not like the fact that shares are registered in their name and not mine. So, for larger investments, I will always use PSG. I do not wish to be caught up in any litigation to get my money or even part of it back should anything happen to the company.

I still think EE is fantastic, especially in regards to pricing, for very short-term and small investments.

Just take a look in the news about all these previous investment schemes / companies that went belly-up. Executors are appointed, assets seized, later sold off and the money is then distributed between all investors and debtors. Many usually lose large amounts of money and recover only a fraction of their investments. This is a real problem any investor faces should the company 'owning' the shares go south.

From that article:

“These whole shares then belong to the investor and are kept separate from GT247 estate and assets in the same way as they would be through any other JSE stockbroker”

Whole shares are listed in the First World Trader (Trading as GT247.COM) Nominees share register with beneficial ownership in the name of the underlying client.

*Hopefully* this means we have some protection.

 

[Toothless]

From that article:



*Hopefully* this means we have some protection.

Yes, there are some limited protection. No doubt about it. But, you will not be protected should GT247 go bankrupt. Like I mentioned before, the outcome of an event like this will be 100% the same as other companies going down.

An executor will sell off all assets, in this case all their shares, and the proceeds will first be used to settle debtors who gets priority and then the 'investors'. If there is not enough money to repay each and every debtor or 'investor' the money will be split up according to what you invested. This means that you will probably only get a fraction back of what you have put in.

This is something they seriously need to look at and try to change. If the shares are registered in your name and they keep it on your behalf, then it is untouchable. Legally, for now, not so much.

 

[Toothless]

For now, as long as shares are registered in the name of GT247 or the company they registered for this purpose, I basically see EE as some type of community-sharing scheme. You tell the company what they should buy, when they should buy and then when they should sell and then pay you for your instructions.

According to me you are not the owner of the shares and you will be caught up in legal battles if something goes wrong at the company to get your money back.

You will only be investing the moment they register shares in your name. Before that, they own everything and you are just part of an investing scheme. Therefore the reason I will never invest large sums of money with them. At least not money I am not willing to lose.

 

[Mike Hoxbig]

Please don't listen to Toothless, he is spreading crap based on his own misinterpretation.

Whole shares are registered in your name, and are held separately from the company assets. This means that if the company goes bust, your shares are still your shares. Creditors can't dip into this account and use client assets to settle debt. In other words, pretty much the same as any other broker.

You will only face an issue if you own partial shares...

 

[Toothless]

Please don't listen to Toothless, he is spreading crap based on his own misinterpretation.

Whole shares are registered in your name, and are held separately from the company assets. This means that if the company goes bust, your shares are still your shares. Creditors can't dip into this account and use client assets to settle debt. In other words, pretty much the same as any other broker.

You will only face an issue if you own partial shares...

Many people, including you, do not read the fine print and do not understand legal interpretations. These people are usually the biggest victims losing the most and normally resort to suicide in these incidents.

Take a look at the bold part from their website below:

How are my assets protected?
Modified on: Wed, 11 Nov, 2015 at 11:41 AM

EasyEquities has to comply with certain regulations regarding the requirement to have adequate net capital and asset protection.

GT247.com segregates your securities holdings and cash in your account, meaning it keeps your assets separate from the company's own assets.

In addition, EasyEquities will hold all client assets in First World Trader Nominees (Proprietary) Limited, which is a ring fenced, private, limited liability company with registration number 2013/091397/07, registered in accordance with the company laws of South Africa and approved as a nominee company to hold assets in its name on behalf of clients by the FSB.

When you purchase Whole Securities, you become the beneficial (true) owner of all those Whole Securities, which will be held by FWT Nominees on your behalf. FWT will ensure that you are reflected as the beneficial owner of your Whole Securities in our books of account.

 

[Deleted member 83147]

Please don't listen to Toothless, he is spreading crap based on his own misinterpretation.

Whole shares are registered in your name, and are held separately from the company assets. This means that if the company goes bust, your shares are still your shares. Creditors can't dip into this account and use client assets to settle debt. In other words, pretty much the same as any other broker.

You will only face an issue if you own partial shares...

How do you know the Whole Shares are registered in our name? Is there any way we can check?

I get that the shares are held in a different company, but my understanding was that their name is on the share certificate and then there is another register that says what I own. But my actual name is not on the share certificate.

From their website:

When you purchase Whole Securities, you become the beneficial (true) owner of all those Whole Securities, which will be held by FWT Nominees on your behalf. FWT will ensure that you are reflected as the beneficial owner of your Whole Securities in our books of account.

I don't really care that much about the FSR's, most of the money is in the Whole Shares.

 

[Toothless]

Just want to point out, I did some reading. If GT247 goes belly-up, your shares will be safe from creditors in the nominee account.

However, it is not safe from fraud. The shares are the property of the company and they can move or sell your shares legally. So, if your shares were raided then you will lose your investment.

I have no issued with EE and the way they operate and will still use them for small investments on very short term. But, that being said, for larger investments I will go with a company registering share certificates in my own name.

 

[redarrow]

I'm not really worried, I doubt there's such a thing as a risk free investment platform, investing itself isn't risk free in the first place.
I certainly wouldn't put all my money into just one place but other than that I can live with the risk.