March 14, 2022
Beneficial ownership is a system vulnerable to fraud. If I give my broker-dealer money to buy shares, I should benefit wholly from any act that my shares experience: from lending fees to voting rights. I shouldn't have to Direct Register Shares in order to actually count as a shareholder. The Beneficial Ownership system needs to be decommissioned. The only system of ownership record keeping that all market entities (broker-dealers) should be allowed to follow is Direct Registration of Shares in the investors' names. Cede Co should have to assign a specific share's specific certificate in my name, when I trade to buy it. I should have full control over what happens with that share subsequently, with no lending or rehypothecation if I don't want it. Modernizing Beneficial Ownership is a waste of effort. The effort should go towards making Direct Registration of Shares the only record-keeping system.