A shareholding can either be registered in the owner's name (owner-registered) or trustee-registered. In the latter procedure, it is the trustee, i.e. the financial company, who is registered as the owner in the share register.
In owner-registered holdings, the shares are held in a securities account in the owner's name, while trustee-registered holdings are registered in a depository in the trustee's name in another type of securities account called a trustee account. The custodian, a bank or other securities institution, collects the custody customers' holdings in the custody account.
Trustees must keep a register of the shareholders who have their shares registered as trustees. Upon request from Euroclear Sweden, they must be able to provide information on all shareholders and the number of shares in a so-called trustee list. The list of trustees must show which shareholders own what.
A financial company that owns its own securities must keep them separate from client assets. It is only this list that gives you a so-called separation right if the financial company files for bankruptcy. If the company, in violation of the rules, has mixed its and its customers' assets and it is not possible to distinguish which holdings belong to whom and the customers risk losing their holdings, the state's investor protection may come into question. Investor protection is a commitment from the Swedish government and is administered by the National Debt Office. Investor protection covers just over $22,000.
This knowledge, which is new to us, has caused us to completely refrain from smaller financial companies. We do not want our holdings to be administered by a financial company equivalent to Fawlty Towers run by a CFO like Basil Fawlty. Although the fictional character mr. Basil Fawlty certainly had no bad intentions.
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