A nominee account allows a stockbroker to hold shares on behalf of a client, making buying and selling those shares easier. The investor remains the only beneficial owner of the shares.
This may be a way for the investor to make it more difficult for anyone to find out how many shares he/she owns in a company since the name of the investor does not appear on the company’s register of shareholders.
It also allows investors to own shares without being involved with any of the paperwork.
The stockbroker is also able to move or sell shares from the nominee account at any time, a mechanism that enables fraud as regulators are not able to check on nominee accounts holdings daily.
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