Selling stock on one's own?

July 25, 2006 6:48 AM

Without a brokerage account, may I legally and easily sell common stock? If so, how?

A few years ago, I was given a few hundred shares of common stock. I have the paper certificates, and no stockbroker's account. I'm not really interested in having the stock in a managed account if I can avoid it; the dividends they produce would be eaten up by the annual fee, and after this sale, I hope to let the remainder sit quietly in a safe deposit box.

I need to sell 100 shares, the number of shares on each certificate. I am in the U.S. Is there a more straightforward (legal) way to do this, without setting up an account with a brick-and-mortar or online stockbroker?

(Duediligencefilter: I'm aware of this thread, but I'm hoping for a fresh batch of answers.)

posted by Elsa to work & money (13 comments total)

Why not open a brokerage account and deposit the shares? There is no annual fee on a brokerage account, at least not on Scottrade. The low cost brokerages doesn't manage anything except taking your orders.
posted by Ferrari328 at 7:22 AM on July 25, 2006

I'm asking if there are other options than opening a brokerage account.
posted by Elsa at 7:24 AM on July 25, 2006

Q: How can I sell stocks when I don't have a brokerage account and don't want to set one up since they often require large initial deposits?

A: Before I get too far in answering this question, I want to make sure you understand that you don't need a large initial deposit to open a brokerage account in some places.

I want to make that clear because opening a brokerage account would be the easiest way for you to sell stock for many reasons.

But, let's say you still want to avoid opening a brokerage account. The other option would be to mail the stock certificates, by insured and registered mail, to the company's stock transfer agent, which is a firm hired by the company to track and process its stock. Before you do that, contact the company's investor relations department or look on its website to find the current transfer agent and get details on how to complete this transaction.
posted by geoff. at 7:43 AM on July 25, 2006

In short, no. There are no other options.

You cannot, by law, trade directly with the stock market.

If you want to sell shares in a listed company then you must go through a broker who acts as the middle man between you and the stock market.

It's been a few years since I last looked at US trading legislation, but unless there's been a significant change in the law then you will need a broker.

If it's been a while since you received the stock then I also suggest checking to make sure the company is still listed and the certificates are still valid - a good broker should be able to help you.

And after reading geoff's answer on preview, I just want to add that a stock transfer agent may not be able to sell the stock for you. Some just look after the administration of the stock that's in circulation.
posted by Nugget at 7:54 AM on July 25, 2006

You can sell certificate shares to anyone you wish, including to someone who has their own brokerage account. YOu just have to fill-out and sign the information on the back of the certificates. I have bought shares from someone who didn't have a brokerage account this way.
posted by ZenMasterThis at 8:26 AM on July 25, 2006

So I can't, for example, walk into a bank or credit union with my certificates and arrange a sale with their financial advisor?
posted by Elsa at 9:04 AM on July 25, 2006

ZenMasterThis is correct. I once sold my roommate one share of Apple Computer. To do this, I asked my broker to send me the actual stock certificate for one share. The certificate has some spaces on the back which you can fill out in order to transfer ownership of the stock to someone else. You do that, and send it to an address listed on the back of the certificate (I believe it's the transfer agent, but I'm not sure).

Of course, the steps described above will only allow you to give the shares to another person. In order to sell them, that other person needs to agree to pay you money for the shares. Do you have a purchaser and an agreed upon price? If you do not, then your best bet is find a broker and sell your shares the same way everyone else does, by using the stock market.
posted by alms at 10:10 AM on July 25, 2006

Zenmaster is spot on. You need to find a buyer and then sign the back of the cert over to her.
posted by JohnnyGunn at 10:31 AM on July 25, 2006

Three people say yes, it's easy; Nugget says no, it's illegal. Nugget, you got a citation?
posted by baylink at 1:27 PM on July 25, 2006

Well, they are both right. This Invest-FAQ article is as good as it is going to get without me going through some old textbooks:

"There is no law requiring you to use a broker to buy or sell stock, except in certain very special circumstances, such as restricted stock, or unregistered stock. As long as the stock being sold has been registered with the SEC (and all stock sold on the exchanges, NASDAQ, etc. has been registered by the company), then the public can buy and sell it at will."

I do not know what, if any laws one would violate by not going throught the transfer agent as I mentioned above (and is again mentioned in the article). Anything above novelty I would recommend following the advice of the company's investor relations department as they will know more about this than you do.
posted by geoff. at 3:34 PM on July 25, 2006

Thanks for all the help, everyone, and particular thanks for the Invest-FAQ link, geoff. Very useful.
posted by Elsa at 10:29 AM on July 26, 2006

For the benefit of future AskMe searchers:

As it turned out, the shareholder accounts service handled the sale for me. (Not all shareholders/stockholder accounts services will offer this option; I own stock in another company which only allows me to buy stock through the service, not to sell.)

After consulting by phone with a customer service rep, I sent in my certificate (unsigned, unaltered) along with a letter and certificate instructing them to convert to book-entry shares and then sell. It took about three weeks from the time I sent the letter (registered and insured for 3% of the total value) to finalize the conversion and sale, which is about two weeks longer than the customer service rep estimated. They assessed a fee of $15 for the sale plus twelve cents per share.
posted by Elsa at 4:33 PM on August 31, 2006

[Yeah, I best-answered my own response so future readers won't miss this simple solution.]
posted by Elsa at 4:36 PM on August 31, 2006