You think you own your stocks. Most people do. You log into your E-Trade or Schwab account, see the numbers, and assume those shares of Apple or Tesla belong to you. But if you’ve been following the noise around The Great Taking David Webb has been talking about, you might be starting to sweat.
Webb isn't some random guy in a basement. He’s a former hedge fund manager who handled hundreds of millions of dollars. He knows how the plumbing of the financial system works. And his core argument is terrifying: you don't actually own your securities. You've been demoted to a "security entitlement holder."
The Legal Trick Nobody Saw Coming
Basically, the game changed in 1994. While everyone was watching the O.J. Simpson trial or listening to Nirvana, the Uniform Law Commission was busy rewriting Article 8 of the Uniform Commercial Code (UCC). This is the "boring" law that governs commercial transactions in the U.S.
They introduced a concept called "security entitlements." Honestly, it sounds like a minor phrasing update. It wasn't. It fundamentally severed your direct property rights to your stocks and bonds.
In the old days, you had a paper certificate. That was yours. Now, your broker holds the "entitlement" in a giant pool. If that broker goes bust—and we’re talking about a massive, systemic Lehman-style collapse—the law now says "secured creditors" get paid first. You? You’re at the back of the line. You’re an unsecured creditor of your own broker.
Why David Webb Thinks This Is a Trap
Webb’s book, The Great Taking, argues this wasn't an accident. He claims it’s a decades-long plan to prep for a global collateral grab. Think about the derivatives market. It's huge. We're talking quadrillions of dollars.
When the next "Everything Crash" happens, these derivatives will blow up. The big banks (the "protected class," as Webb calls them) will need collateral to cover their losses. And thanks to the UCC Article 8 changes, they can legally reach into the pool of "customer assets" to save themselves.
It’s like a Monopoly game where the bank realizes it’s losing, so it just flips the board and says all the houses on the table now belong to the house.
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Is This Actually Happening or Just a Theory?
People love to debunk this by saying the SIPC (Securities Investor Protection Corporation) protects you. Sure, it does for a single broker failure up to $500,000. But Webb’s point is about a systemic failure. If the entire clearing system—entities like the DTCC (Depository Trust & Clearing Corporation)—faces a meltdown, the insurance fund would be like a garden hose trying to put out a forest fire.
We saw a preview of this with Lehman Brothers in 2008. JP Morgan Chase used Lehman’s accounts as collateral for loans Lehman couldn't pay back. They got the assets; the smaller investors got the shaft. Webb argues this was the "pilot program" for what's coming next.
The Role of Central Clearing Counterparties (CCPs)
There is a lot of talk about CCPs in the book. These are the "middlemen" of the financial world. They were supposed to make the system safer after 2008. Instead, Webb argues they've just concentrated all the risk into a few "super-nodes."
If one CCP fails, it triggers a cross-default across the entire global system. This is the "kill switch." Once that happens, the legal framework is already in place to sweep up all the collateral—your stocks, your pension, your 401k—to settle the debts of the big players.
What You Can Actually Do About It
Wait, so should you just stuff cash under your mattress? Not necessarily.
A few states are actually pushing back. Legislators in South Dakota, Tennessee, and Oklahoma have started looking at bills to restore individual property rights in the UCC. They want to ensure that "the guy who bought the stock" stays the owner of the stock, even if the broker goes under.
Supporting local legislative efforts is probably the most "macro" thing you can do. On a personal level, some people are looking into "Direct Registration" (DRS). This moves your shares out of the broker's "street name" and puts them directly in your name on the company’s books. It’s more paperwork, and it’s slower to trade, but it removes that "entitlement" middleman.
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Real-World Action Steps
If you’re worried about the scenario laid out in The Great Taking David Webb has detailed, don't just panic-scroll. Take these steps to audit your own exposure:
- Research Direct Registration (DRS): Look into how to move your long-term "forever" holdings out of street name and into your own name via a transfer agent like Computershare.
- Check Your Broker’s Terms: Read the fine print on "rehypothecation." This is when your broker uses your stocks to back their own bets. Most "free" brokers do this by default.
- Diversify Into Physical Assets: Webb and other experts often suggest holding a portion of wealth in assets that don't have "counterparty risk"—meaning physical gold, silver, or even paid-off land. If it’s a digital entry in someone else’s database, you don't truly control it.
- Track State UCC Legislation: Follow groups like the Heartland Institute or your local state representatives to see if your state is one of the few trying to fix Article 8.
The reality is that our financial system relies on a "trust me" model. Most of the time, it works. But as David Webb points out, the legal "plumbing" has been quietly re-routed over the last thirty years. If the pipes burst, you want to make sure your house isn't the one getting flooded to save the bank down the street.