The Great Taking

A package for first-time viewers

"Securities are not Personal Property anymore."

Last revised on Sept. 22, 2024

Previously, I had written a long and windy blog post on The Great Taking. Here I do the opposite. This blog post is suitable for people who aren't familiar with The Great Taking.

For an introduction to The Great Taking, please read the open letter entitled "Protecting Private Property Through the Uniform Commercial Code": https://heartland.org/wp-content/uploads/2024/01/1-26-24-UCC-Article-8-State-Legislative-Alert_Final.pdf.

The above letter is based on a documentary and book named The Great Taking (published May 2023), authored by a former American hedge fund manager and investment banker who is now retired and living in Sweden, named David Rogers Webb, born 1960.

Last March (2024), the authorities issued a rebuttal to The Great Taking through this statement.

Here's the situation.

The company that owns most of the stocks and corporate bonds in the U.S. is called Cede & Co. Wikipedia coverage of Cede & Co: https://en.m.wikipedia.org/wiki/Cede_and_Company

In essence, there is no legal ownership of stocks and bonds, meaning that the holder (e.g. the owner of any brokerage account holding stocks and bonds) does not have any property rights. There is just beneficial ownership which is called “security entitlement.” 

The only way to enjoy true property rights is to have possession of physical certificates or to transfer one’s stocks to what’s called DRS. (DRS stands for Direct Registration System.) For U.S. corporate bonds, there doesn't seem to be an entity analogous to DRS, but for US government bonds, it's called TreasuryDirect.

Margin accounts are more vulnerable than non-margin accounts.

The absence of legal ownership matters in the event of insolvency. What’s relevant is the insolvency of a brokerage or most likely, that of a financial intermediary, especially a central clearing company.

The section of the law that is problematic consists of Subsections (b) and (c) in Section 511 of Article 8 of UCC, https://www.law.cornell.edu/ucc/8/8-511. UCC stands for the Uniform Commercial Code. It is state level law in the U.S.

The concept of The Great Taking is not fictitious. Evidence of it appeared most recently in April 2024 in a Reuters article where "regulators were told to be ready to handle failed clearing houses."

The same situation prevails in Europe and Japan.

Author is also on Twitter