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Ownership of Shares in a Super Wrap

Discussion in 'Superannuation, SMSF & Personal Insurance' started by DJ Zany, 22nd Jan, 2010.

  1. DJ Zany

    DJ Zany New Member

    Joined:
    9th Jun, 2009
    Posts:
    4
    Location:
    Melbourne
    This question would have been a lot more topical a few years ago in the days of Storm etc...

    If I have a super wrap, I assume the trustee is the platform provider, and the investments are held in trust for me.

    What happens if they go under? Are my investments are available to me before other creditors.
    Is there a situation where it could all disappear (ie a fraud)?

    I think I was too scared to ask at the time!
     
  2. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi DJ,

    I think your thinking more about Opres Prime as they transferred stock to the operating entity rather than having individual HINs/registrations.

    Yes, most trustees are the owner as they generally use one CHESS HIN to hold all the shares for hundreds if not thousands of investors. In their computer software they obviously have to account for every single investment including any shares which are being held.

    Not sure what happens if they go under, though the funds are under trust which means they are not assets of the trustee so the trustee should not access those assets to pay debts. While it's unlikely that it would all disappear especially due to fraud, the great thing about the sharemarket is that everything is recorded in triplicate, ie, the sponsoring broker for the HIN has a record, the ASX has a record and the share registry has a record.

    There are many more stories about homes (title deeds) being fraudulently transferred as opposed to stocks being transferred for this reason.

    Hope this helps a little bit.

    Cheers,

    Dan

    PS This is general information, speak to your trustee or nominee as they may operate differently.
     
  3. DJ Zany

    DJ Zany New Member

    Joined:
    9th Jun, 2009
    Posts:
    4
    Location:
    Melbourne
    Ah yes, of course Opes Prime.

    Thanks for that, the bit about the trustee makes sense also when thinking about it from first principles. The funds in trust would be protected from their creditors.

    Not sure what their answer would be if I asked them what would happen if they engaged in fraud!:D