Recessions and stock market crashes are inevitable in a market-based economy, but few Americans realize that their investments face risks far greater than falling stock prices.
Because of largely unknown legal changes, millions of Americans could temporarily or even permanently lose their retirement and other investment savings in the next major financial crash, all while too-big-to-fail Wall Street firms and banks are protected.
That might sound like a wild conspiracy theory, but the danger is real and well documented.
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Beginning in the 1970s, at the request of powerful Wall Street and banking institutions, state lawmakers quietly adopted a series of changes to the Uniform Commercial Code, a body of law enacted in all 50 states. These changes effectively allowed financial institutions to reassign direct ownership of most securities away from individual investors, including those holding retirement accounts and traditional brokerage accounts.
Under the revised legal framework, direct ownership of securities such as stocks and bonds was centralized within a single financial institution controlled by Wall Street’s largest firms and banks: the Depository Trust Company, or DTC.
Today, DTC “provides custody and asset servicing for 1.44 million security issues from more than 170 countries and territories valued at more than US $100 trillion as of 2025.” To put that figure in perspective, the entire federal budget is roughly $7 trillion.
In January, I released a new book, “The Next Big Crash: Conspiracy, Collapse, and the Men Behind History’s Biggest Heist,” to explain how this legal framework was constructed, why it poses grave risks to consumers today, and to uncover the remarkable conspiracy behind DTC’s creation. The book is the culmination of years of research, and the evidence it presents is nothing short of stunning.
The Depository Trust Company sits at the center of the modern securities ownership model. Major banks and broker-dealers, with the help of a mysterious figure with a long history of working for and alongside the CIA, created DTC in the early 1970s with the stated goal of alleviating Wall Street’s growing paperwork crisis.
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At the time, buying and selling securities was a slow, paperwork-heavy process. By centralizing registered ownership of securities in a single institution, transfers could be executed simply by changing records, which today occurs electronically. What once took several days could be completed almost instantly.
Lawmakers were told this shift was a technical modernization designed to improve efficiency and reduce risk. In many respects, it did exactly that. The cost and time required to do business on Wall Street dropped dramatically after DTC’s creation. But these gains came at a steep price. Centuries of property law were effectively discarded. Traditional securities ownership, grounded in clear title and constitutional protections, was replaced.
Under the current DTC model, most investors no longer directly own their securities. Instead, they hold what the law refers to as a “security entitlement.” This arrangement is contractual in nature. It grants certain rights and protections, but it does not confer direct registered ownership. When you buy stock in a company, you do not actually acquire the stock itself. You get a set of investment rights tied to that stock.
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This system raises serious ethical concerns. It delivers enormous benefits to the most powerful financial institutions while weakening the ownership rights of ordinary investors.
Centralized ownership allows securities transactions to be processed at extraordinary speed, fueling ever-increasing activity and on Wall Street. That activity generates massive fee revenue for large institutions.
In recent years, institutions have also reaped enormous profits from riskier practices such as stock lending and derivatives trading. These activities could not have occurred at anything close to their current scale under the stronger ownership framework that existed prior to DTC’s creation. Centralized ownership made them possible.
Worse still, Wall Street and lawmakers did not stop there. In the 1990s, they leveraged centralized ownership to implement further changes to regulatory and legal codes designed to protect large financial institutions during systemic crises.
Under Article 8 of the Uniform Commercial Code, if a brokerage firm collapses during a financial crisis, secured creditors, including banks, may seize securities used as collateral in lending arrangements with broker-dealers. This can include customer securities, such as stocks and bonds, if they were pledged as collateral for those loans.
As a result, during the next major crash, investors could lose their entire portfolios if their broker-dealer pledged customer assets to obtain financing.
Current regulations generally prohibit investment firms from using most customer securities as collateral, other than for margin accounts. However, Article 8 permits secured creditors to seize customer assets pledged as collateral if a firm cannot pay its debts, even if the securities were improperly pledged.
Moreover, as I document in the book, existing emergency powers laws could be invoked during a crisis to alter or suspend rules meant to protect customers. Lawmakers could also enact new legislation that weakens current consumer safeguards.
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The good news is that this problem is not irreversible.
Because the Uniform Commercial Code is state law, state legislatures have the authority to restore investor priority. A small number of lawmakers across the country have begun to recognize the danger and push back, but sustained public pressure will be required to achieve meaningful reform.
The next financial crash could arrive sooner or later, and its precise trigger is impossible to predict. What is predictable is the legal structure waiting on the other side. Unless Americans demand change now, many could discover too late that many of the rules governing their retirement savings were not designed to protect them.
Justin Haskins is a New York Times bestselling author, vice president at The Heartland Institute, and a senior fellow for Our Republic.
