A law was introduced in the ’90s that was sold as a way to shore up the financial system. Now, Glenn Beck warns, it could destroy your financial investments.
While the law claimed to help, in reality, it was a way to bail out big financial institutions by allowing them to use your investments as collateral in the event of a financial collapse.
States changed Article 8 of the Uniform Commercial Code, a state law passed in all 50 states. This change meant that investment intermediaries like Merrill Lynch or Fidelity hold your actual stock on behalf of you. The change means that you, the purchaser, don’t actually own your investments. The stock broker or the intermediary does.
Glenn says that it means, “hopefully, nothing.”
“However, if you believe the banking system is weak. If you believe that you could see a major shift with a catastrophic black swan, it could mean you lose everything,” he continues. “It takes the insane ‘you’ll own nothing’ promise to a whole new level.”
The change also allows for stock brokers and other intermediaries holding your investment to use them as collateral in their own financial agreements.
“The reason why this is so dangerous is if the intermediary goes bankrupt, the stock you think you own can be taken by another big financial institution who’s owed money by that bankrupt stock broker, and they’ll take your fund to cover it,” Glenn explains.
While the law could deliver a devastating blow to the average U.S. citizen, there are states fighting back.
“The first state is now fighting back on this, and it’s South Dakota,” Glenn says, but “more help is needed.”
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