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What are 'public
investments'?
"Public Investments" are investments offered over public exchanges such
as the New York Stock Exchange, Chicago Board of Options, American Stock
Exchange, NASDAQ and the over-the-counter markets, etc. In addition, Federal,
State and Municipal offerings such as Treasury Bills, bank certificates
of deposit, mutual funds, municipal bonds and bills ("munis") are generally
considered public investments. All such investments are registered with
the Securities Exchange Commission (SEC) as public investments.
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How do they become
public?
Common stock of companies goes "public" when it files for listing and
registration on one of the public exchanges. In order is to be accepted
for listing on an exchange, a company has to have its offering registered
with the SEC and must submit information about its financial and other
corporate history. Once a company is listed on an exchange, its stock
may be purchased or sold through that exchange.
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Who buys/sells them?
Securities broker firms work with all the exchanges, either directly or
through agents, to acquire or sell securities for their clients. Most
brokers also will acquire certificates of deposit and U.S. and municipal
bonds for their clients and these investments can also be acquired directly
form their sponsors (e.g., Federal Reserve, state and national banks,
credit unions, etc.).
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How are they
regulated?
All of the exchanges and financial institutions that offer public investments
are regulated either by the U.S. Treasury Department (I.R.S. or S.E.C.)
or state or Federal Bank regulators. While this does not guarantee that
all transactions will be performed legally and efficiently, there is a
high degree of assurance that such will be the case. top
Is PENSCO a securities
broker/dealer?
No, not anymore. PENSCO was a securities broker/dealer from 1997-2001
servicing a limited number of its clients in that capacity.
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Can PENSCO clients
trade public investments?
Yes. Both before and after being a broker/dealer, PENSCO has allowed clients
to invest in public investments through a broker/dealer of their choice.
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How does this
work?
Currently,PENSCO works with over 100 broker/dealers, whereby PENSCO establishes
brokerage accounts on behalf of its clients at the clients' broker/dealer
of choice. These brokerage accounts are then held as an asset within the
clients' PENSCO IRA accounts. The registration on the account reads "PENSCO
Trust Company, custodian fbo "client name", IRA, Acct. no. ____". In this
way, the brokerage account is part of the overall PENSCO client account.
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Why hold a brokerage
account in a PENSCO IRA?
- Ease of management. Holding a brokerage account at PENSCO allows
the client to view their entire retirement portfolio at once, and to
receive consolidated statements.
- Speed of transfer. With the trading account inside the PENSCO
IRA, funds can be moved quickly and easily between traded (or public)
investments and non-traded investments such as real estate or private
placements.
- Cost Effectiveness. Because the need to transfer funds between
institutions is eliminated, the typical $50 fee for a Partial Transfer
out from PENSCO can be avoided. Instead, adding additional cash (i.e.
incoming dividends, etc.) to a trading account becomes a free transaction.
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How does a
PENSCO client initiate a public trade?
Conveniently, PENSCO clients are able to deal directly with the broker
of their choice in buying and selling securities (e.g., without going
through PENSCO to effect the transaction). Once the brokerage account
has been established (click here
to read how to), the client is given direct control over those funds.
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Mutual Funds
in a PENSCO IRA.
PENSCO can also buy mutual funds for its clients directly. PENSCO
does not charge a commission for doing so, and you can purchase
any of over 4,000 funds. Simply fill out our Investment
Authorization for Publicly Traded Investments form to indicate
which fund you would like to buy/sell from which company, and PENSCO
will then buy or sell the mutual fund of your choice. (Click here
for more detail.)
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Something to be wary
of.
Do not assume that an investment published in a public newspaper is necessarily
a "public investment". Some of the investments are limited private investments
which may be violating securities regulations by publishing to the general
public without having filed as a registered investment.
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PENSCO's Non-Advisory
Role
As a regulated custodian, PENSCO can acquire or liquidate public investments
for you directly (mutual funds, cd's, Treasury Bills) or indirectly (stocks/bonds
through a brokerage account). However, PENSCO cannot advise you as to
investment strategies, particularly for public investments, nor sell you
investments.
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(The foregoing is a general discussion. It is not intended, and should
not be relied upon, as an opinion or advice on any legal, tax or investment
aspects of IRAs. An IRA owner considering an IRA investment in real property
should consult with his or her own advisor.)
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