Broker delays issue of share certificates

A SEVEN week delay in receiving a share certificate has prompted Mr D, a reader from Limerick to complain both to Family Money and the Stock Exchange, which has begun to investigate his case.

"I placed a small share purchase order for 1,000 Unidare plc shares with a Dublin-based stockbroker on July 19th last," writes Mr D, an accountant who has purchased shares before. "The transaction was divided into two 500-share batches with a final settlement date of July 29th. I choose them partly because they were charging a £35 commission instead of the £60 I was quoted by other brokers. Seven weeks later and I am still waiting for my share certificate."

Mr D confirmed all the details of his purchase by fax to the broker and "ten days following the settlement date I confirmed with them that there were no monies due on my account. I was advised at this stage that registration and issue of certificates would take approximately two weeks. I was not unduly concerned as my previous experience of purchasing shares through a different broker involved a one week delay."

However, four weeks after placing his order and still without his share certs, Mr D contacted the broker once again and discovered that his shares had been registered in a nominee' account held by the broker as part of the new CREST registration system.

In response to my protests that this had been done without my instruction or permission I was advised that since the CREST system came on stream all private investor share purchases were being treated in this manner. I requested that the shares be re-registered in my name and the certs forwarded to me. I was informed this would take another two or three weeks. Concerned, I requested an official receipt for my payment of £2,018 which was issued only after two further phone calls, says Mr D.

Family Money spoke to the stockbrokers in question about Mr D's case and was told firstly that Mr D had been asked whether he wanted to have his shares put into the broker's nominee account and that he had agreed (something our reader strenuously denies). The delay in issuing the certificate, we were told, was due to the fact that the broker purchased the shares on Mr D's behalf through a London `market maker', a stockbroker that commits itself to buy and sell shares at specific prices rather than a more traditional agency broker and that they were taking their time in passing the certificate onto Dublin.

"Mr D is concerned about whether he legitimately owns his shares, as he is without the share certificate. He would also like to know if there is a code of practice at the Stock Exchange regarding client instructions concerning nominee accounts and what redress is available to the small investor who experiences unwarranted difficulties such as obtaining share certificates."

The Stock Exchange has confirmed that on foot of a formal complaint from Mr D. they have begun investigating the case, but refused to comment on the specific issues raised. However, a spokesman said that generally share certificates should be received within a fortnight," (Mr D was told by the Unidare plc share registrar at AIB Bank that original share registration or re-registration "should only take a week".)

Under the rules of the Stock Exchange, said the spokesman, brokers are also -obliged to seek the express permission of the client to register their shares in a nominee account." Complaints should always be addressed to the regulatory manager of the Stock Exchange, whose job it is to ensure that the eleven stockbroking firms in the Republic are complying with the rules of the Exchange.

Meanwhile, Mr D says "the lesson I take from this experience is that for future transactions, I will use the services of a broker affiliated to a bank. Also I believe there is a definite market niche for a bank to offer share services through bank branches in a similar manner to the method in which savings or insurance products are sold."