DTCC Releases Statement on $37 Trillion in Damaged Stock Certificates

The Depository Trust & Clearing Corporation (DTCC) has released a statement regarding the status of it’s NY securities vault after assessing the flood damage from SuperStorm Sandy.  The DTCC, which had previously stated that up to $37 TRILLION in stock certificates may have been damaged, stated that upon examination of the vault, that significant flooding and water damage occurred throughout the facility and that It is too early to determine how many of the physical certificates can be restored. The restoration process will take some time, possibly months.

Full DTCC Press Release below:

 

From BusinessWire: (H/t ZH)

NEW YORK–(BUSINESS WIRE)–The Depository Trust & Clearing Corporation (DTCC) has begun the initial phase of recovering the contents of its securities vault. Our analysis of the condition of the vault, once we were able to open it, was that significant flooding and water damage occurred throughout the facility. While it is premature to determine the full extent of the damage, it is essential to begin the restoration process to avoid further deterioration.

DTCC has retained highly-recognized, well-respected disaster recovery and expert restoration firms to work with on this important effort in order to carefully and diligently address the challenges resulting from the damage caused by Superstorm Sandy.

DTCC expects to have a more accurate assessment of the condition of the physical securities within a week’s time. It is too early to determine how many of the physical certificates can be restored. The restoration process will take some time, possibly months.

DTCC maintains a robust certificate inventory file with ownership information that can be replicated from our multiple data centers. The company’s computer records are fully intact, including detailed inventory files of the contents of the vault. This effort is more of an administrative and logistical challenge than an economic issue. DTCC is engaged in active discussions with representatives of various transfer agents for the purpose of establishing a protocol for the issuance of replacement certificates, without requiring the presentation of the original certificates.


GOT PHYZZ??

Comments

  1. I hope they have plenty of BLOTTERS. their going to need them. Lol

  2. No biggie they will just print more paper bonds, they will print 57 trillion to cover the 37 trillion 

  3. LOL this part sounds like post 911: “DTCC is engaged in active discussions with representatives of various transfer agents for the purpose of establishing a protocol for the issuance of replacement certificates, without requiring the presentation of the original certificates.”
    Just make it up…no need for those pesky originals…

  4. If they have electronic backup, whats all this news about then?
     

  5. Electronic Backups Can Be Manipulated and Changed But Paper Originals Can’t. Lol

  6. First we thought the theft of the century took place on 9/11. Then we thought it happened with the Lehman/AIG collapse. Then MFGlobal, PFGlobal. Now this. This is the biggie. Leveraged to about 37 trillion. Rehypothecated if you wish. And then the chain of ownership (creditors!!!) is — oops — gone. Scandal of 2013. Huge huge wealth transfer from the outsiders to the insiders, AKA as theft. Just be happy you’re not in it.
     
    This is about MBS, ETFs, CDS, stocks, bonds, the whole works. They’re setting themselves up to steal it all in one swoop while trying to get a get-out-of-jail-for-free card AND surviving the deleveraging tsunami.
     
    Savings shouldbe put in real stuff not paper, goes to show.

  7. What they will do is send the wet records out to be vacuum freeze dried.  It will take a while, though.

    • Even if these certificates were to go “POOF!” and disappear completely in a puff of smoke, they can’t tell us with a straight face that there are no financial records that show who bought them, when, the certificate serial number, for how much, etc.  Financial companies keep records of this type up the ying yang and out the gazoo.  And yes, they would also be backed up to an off site server or two somewhere else.  There are many procedures that are implemented with MUST NOT LOSE data and info of this type and value probably uses all of them.

      One thing about this so-called story is that the implication that the big bad wolf (banks) is gonna cook and eat the three little pigs (small time investors, like many of us).  Nothing could be further from the truth.  The REAL customers for these certificates is likely to be the big multi-billion dollar hedge and mutual funds.  And they do not accept excuses like “the dog ate my homework” or “we lost the certificates in a storm”.  DTCC would be buried in a blizzard of legal papers so fast that they would not likely see day-light for years… if ever.

    • Exactly Ed! Because of that, I also had doubts about the losses. How can 37 trillions of dollars can be lost in one shot? There must be a lot of securities to protect that large amount and not simply a vault that is storing the stock securities.

  8. As a programmer some where is busy writing software to change ownership as the requested computer records start to flow in…

    • Right… and the hedge funds and mutual funds will just say, “OK, then, we’re out of luck” and write off the losses?  Not hardly.

  9. They’re lying through their teeth. Just my two cents. 

  10. But these would surely be “in street name” certs only.
    Who in their right mind would not buy with direct registration and have
    a stock cert?
    And, I’ve never bought a stock in my life and I know that you should never
    buy stocks “in street name”. Common sense, right?????????

    • Depends on what you are doing.  If you are trading stocks they pretty much have to be in street name because anything else is just too slow to be workable.  A street name stock can be sold with a few mouse clicks any time the exchanges are open or at any time at all if you can trade on foreign exchanges.  If you hold the certs, you have to deliver them to your broker and go through some paperwork gymnastics before money is traded for the shares and then you get to go through all that again for any shares you buy.  Very clumsy.  Getting certs in your name is good for long-term buy-and-hold investors, though.

      Much of the paranoia about investing in stocks, bonds, ETFs, etc. come from people investing in futures and options and having their segregated accounts stolen ala MF Global.  These are the types of things that are subject to hypothecation, rehypothecation, and other assorted nonsense.  I read the fund prospectuses for the funds I invest in at Vanguard and they do not hypothecate any of their clients’ funds, shares, etc.  Others, like Scottrade, do but ONLY when one is engaged in futures and options where people are making trades and need to transfer ownership but not the shares until the funds settle and the trade is complete.  Brokerages that serve a very large number of people cannot afford to play around like MFG apparently did.  They know that it would destroy their business and probably them along with it, so are very careful to protect their public image of trust.

  11. Yes I think it’s the street names. Probably by far the biggest chunk of all, and that’s how they’re going to get away with it. Steal sh*t from some, huddle with others. In other words rearrange the chain of ownership. Or “dematerialization” as they apparently like to call it. The big hedgies then get settlements somewhere around zero.

  12. http://www.nypost.com/p/news/local/manhattan/sunken_treasure_R1WidDOAwSBvWbYgSIoflJ
     
    NYPOST has quite a few juicy details. Looks like Goldman’s running the show.
     

  13. Finally! I have some doubts that the DTCC lost 37 trillions of dollars like that in one shot especially when they are in physical paper. At least when the stock certificates are physical paper, it can be recovered by simply drying up the paper or something like that.

Speak Your Mind