Stock transfer without broker is possible but complex

On Money

October 22, 1995|By Susan Bondy | Susan Bondy,Creators Syndicate

I have several stock certificates I wish to sell to a friend. Do I have to go through a brokerage firm, or can we handle the transaction between ourselves? If we can handle it without a brokerage firm, how do we notify the company of the new stock ownership?

My first question to you is: Why do you want to avoid a broker? You will certainly be complicating matters for yourself.

But, if you choose to do it yourself, here is what you will need to do:

* Ascertain that the stock is registered properly and can be sold.

* Determine that the stock is registered in your name.

* Determine a price and a trade date for tax purposes.

* Draw up a contract to that effect.

* Last but not least, contact the stock registrar and follow instructions for the orderly transfer of title to the shares.

You should also be aware that if this procedure (stock transfer without a broker) is done too frequently, the Securities and Exchange Commission may require you to register as a broker or dealer.

Brokers can expedite such transactions, and most will arrange for the transfer of shares at no cost. Of course, it is then up to your friend and you to settle on a price, and since a stock's price can change minute to minute, this may be harder than you think.

To minimize your headaches, reduce costs and prevent future problems, I heartily recommend you use the services of a registered broker.

Susan Bondy founded her namesake financial services company 1980 to provide financial planning and asset management. She is a frequent guest on "Good Morning America," the "Today Show" and National Public Radio. She is the author of "How to Make Money Using Other People's Money." Write to Susan Bondy in care of The Sun, 501 N. Calvert St., Baltimore, Md. 21278. All letters will be treated confidentially.

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