Can you sell shares without going through a broker?

Question

1.Do you get paperwork for buying shares (certificate)?

2. imagine i've got a friend that i want to buy a share from can i just pay him in cash and take the paper work from him?

3. is it legal and official?

thank you

Answer 1

All publically traded securities must be sold through a registered broker/dealer.

If you buy securities you don't have to get a physical certificate, many investors do not.

There are ways of making a private sale

You could buy the stock from your friend but you must obtain an agreement of sale. spelling out your cost.  

This is important when filing tax returns.  You're friend will need for reporting any gains or losses.   You will need for proof of ownership and for your taxes when you sell it.

It would be helpful if you record the current market prices at the time of your transaction.  This is helpful and provides protection in the event of any future litigation, wither by you or your friend.

Your friend must send the certificate to the transfer agent whhich is shown on the face of the certificate, after having their signature guaranteed by a broker/dealer or a national bank.  The certificate should have a written request attached to register the certificate in your name and returned.

This is legal and "offical" but it is not the smartest way to do it.  It would be best if your friend just sold it through a broker and in three days would have his money.

Answer 2

Yes, you can buy share without a broker.  The Uniform Commercial Code sets the standards for a valid contract to buy and sell anything.

Do you get paperwork?  Probably not.  You can buy the shares, but to register the shares with the issuer, you need to go through the broker.  So, if you buy IBM stock, but don't use a broker, IBM doesn't recognize you as the owner.

Is it legal?  It's legal for you to buy the share.  It's not legal for your friend to sell the shares.  Only a licensed security dealer can sell stocks.

For your protection, I would use a broker. It's only going to cost you $10 bucks online, and it's going to be cleaner for you.

Answer 3

Yes, if you know someone who wants to buy or sell the shares directly to or from you.  He/you needs to have the share certificate in hand and signs it over to him/you.  If you do not have the certificate in hand that is if the shares are held in street name then it becomes more complicated.  If you are selling the shares, then you need to get a certificate or tell your broker to make out a certificate to whom you have sold the shares to.   Many brokers charge about $35 for getting a  certificate generated.  It did not used to be like that but it is now.  Once you get the signed over certificate you send it to the transfer agent and the transfer agent issues you a certificate in your name.  It is somewhat of a complicated process but it is legal and official.