HOUSEKEEPING
What if your broker changes firms?
The ideal relationship with a financial adviser would end in one of two ways: The broker retires or the customer dies. But sometimes, on the way to having an adviser for a lifetime, that broker may change firms.
The typical question for the consumer at a time like this is “Should I stay or should I go?”
The New York Stock Exchange, as part of its “Informed Investor” series, has tried to help consumers answer that question by running through the concerns a consumer might have when the broker changes firms, and the considerations that are likely to arise. To plan your course of action, go to .
SHORT COURSE
Naked short-selling is illegal
The suggestively racy name doesn’t go far enough, as naked short-selling is actually an illegal practice.
A short sale – which is a bet that a security is about to decline in price – requires an investor to borrow shares of a security and sell them; if the price of the stock goes down, the investor buys back the shares, returns them to the institution they were borrowed from and pockets the difference.
In a naked short sale, traders – usually professional investors and hedge funds – fail to ensure that they can, in fact, borrow the securities somewhere. By registering the trade without actually borrowing the shares, the short-seller can put unlimited pressure on the stock, constantly turning up the heat – by “selling” shares that they can’t actually find or use – until the stock responds by declining.
