Hacker News Reader

Comment by ValentineC | Hacker News Reader

Another article from the same author on how to be a Dangerous Professional: https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...

(HN discussion: https://news.ycombinator.com/item?id=15206926)

View on HN

> “But I’m not a shareholder!” A surprising amount of Americans are shareholders in large financial institutions. Do you have an IRA? Does it invest in e.g. mutual funds? If you own a mutual fund or index fund, you are highly likely to beneficially own fractional shares of US financial institutions. Someone who owns 0.01 shares is a shareholder; welcome to the magic of capitalism.

I like this guy. He has great insight, this is very well put :D

It seems wrong though - I am not an American, but if you e.g. own shares in an ETF (or mutual fund), you just own shares in the ETF while they own the shares in the underlying assets.

I am not even sure if there's a legal definition of shareholder, but assuming that there is, I suspect this doesn't cut it and you are simply a stakeholder instead. Feel free to link to relevant materials, if that's not the case.

Legally, people make distinctions between different kinds of ownership. So you can be the "beneficial owner" without being the "registed owner".

In fact every public US stock is owned first by Cede and Company. Any public stock you own is a contract with them (via intermediaries). https://en.wikipedia.org/wiki/Cede_and_Company

As far as I understand, Cede's contractual rights make it so you are pretty close to 'owning' the stock compared to ETF/Mutual Fund.

>So you can be the "beneficial owner" without being the "registed owner".

Are you the 'beneficial owner' of an ETF's invested assets or just of the ETF instead?

You are the registered owner of the ETF, but the beneficial owner of the underlying shares.

Not correct. If you own an ETF you do not have voting rights of the underlying stocks. So you are not a beneficial owner of the underlying.

You also do not have "direct" access to the dividends. The fund manager will pool the dividends and pay them out on a regular schedule, after taking their cut of fees.

The IRS defines "beneficial owner" as "the person who is required under U.S. tax principles to include the payment in gross income on a tax return"[1]. Using that definition, you certainly would be a beneficial owner regardless of whether you can directly exercise voting rights or directly receive dividends. The indirectness is the whole point of the distinction between beneficial and registered owners.

[1] https://www.irs.gov/instructions/iw8ben#idm140376280574400

But you don't need to write every stock the Mutual Fund invested in - just the Mutual Fund itself, so this makes it even clearer.

By that logic, nobody is a shareholder at all, thanks to the magic of Cede and Co. [1] The only real owners are the holders of the physical stock certificates - and almost nobody does this in real life for numerous reasons.

[1]: https://en.wikipedia.org/wiki/Cede_and_Company

A pretty good criterion would be, I presume, whether you vote your shares for the election of the board of directors. If you vote, you're definitely a shareholder.

Ha. My dad has an account at cooperative bank (https://en.wikipedia.org/wiki/Volksbanken_und_Raiffeisenbank...) and every time he has business at the bank, he says: "You know, I am a co-owner of this bank". Usually the personnel is confused by this.

They probably hear that dozens of times a day.

If they did, wouldn't they not be confused by it?

Being polite to a customer.

>I like this guy. He has great insight

I'm sure customer service people and healthcare professionals love people coming on premises and throwing their weight around with exaggerations and half-truths.

The people I know would put you on the bottom of the list.

You're lacking context. It says that when you don't know where to send correspondence at big banks you could try and address investor relations because they are usually bored and will gladly forward your complaint to the right department. This is where the investor part comes in. And only there. Other suggestions are that you could address the legal department because they are diligent by law. Or the CEO, because if it gets handed down from their office it will have more weight.

Note that the cases talked about involve legal deadlines so knowingly delaying to handle them is not a good option.

>Note that the cases talked about involve legal deadlines so knowingly delaying to handle them is not a good option.

Are we reading the same thread? The cases talked about are mundane customer service interactions.

My significant other works in consumer facing healthcare. Every day customers come in proclaiming they "know the owner" or "are a lawyer" or "will take their business elsewhere", expecting to be prioritized. This isn't some clever life-hack; the people who do it are, in my opinion, jerks.

I'm talking about the article linked in the comment upthread which is about identity theft. Where in that article or the thread was it suggested to refer to yourself as a shareholder to customer service? It's only ever mentioned as a reason to contact investor relations.

The author specifically recommends against grandstanding exactly because it signals "not a professional". So I really don't get your complaint.

Yeah...

It's a warning sign to be ultra-defensive and strictly adhere to protocol (and document every action taken). In any normal situation, there is room for adjustment, but not if you're interacting with someone who seems to have a superiority complex (doesn't mean they actually do, but it seems that way). No one is going to scare me into doing it wrong so I can get reprimanded for it later.

His whole point is to bypass the “customer service people”.

I think a surprising amount of Americans are invested in the stock market. But that does not make them shareholders in us companies. Most of this exposure is through "40 act" funds like mutual funds and ETFs where investors in these funds do not have the underlying vote of the stocks the fund is invested in.

It's actually about half and half. About 45% of Americans don't own any stock whatsoever, either directly or indirectly through IRAs, mutual funds, ETFs, etc. [1]

1: https://news.gallup.com/poll/266807/percentage-americans-own...

Reply on news.ycombinator.com