should really tell you when you sign a brokerage agreement. Imagine an ad for "Goldman Sucks". A broker takes a guy's money and just puts it in his pocket. And the guy acts quizzical..and the broker explains: "I can take your money and buy fake shares and your stock becomes worthless and you lose money and I keep the commission. This is much more efficient.. I just take your money. Same result, less paperwork. But you will have a big tax write-off."
The client gets hostile and asks about real shares. Whining response, "We would have to go into the market and buy real shares to put in your account, but we find that we make more money by giving you shares that we make electronically." This way, we have the use of your money, you have a statement that says you own stock, but we make more money this way. You can sell your electronic stock to somebody else, but then your account will be credited with their money, and they won't know that they are getting an electronic share. And even if we buy in the market, we may be getting electronic shares. We wouldn't know unless we check to see if real shares are delivered. And that is kinda a drag. If we ask for delivery, it makes it kinda embarrassing for other brokers when they can't deliver real shares, cause they may be trying to deliver some of the shares that I created last month."