My Private Stock is Going Public. What Do I Do?

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Investing in private equity with a self-directed IRA affords the unique potential for profit when the company in which your account is invested elects to go public via initial public offering (IPO). For example, if your self-directed retirement plan acquires a private stock for $10 and the company decides to file for an IPO, that stock may be purchased by an underwriter (a financial institution that coordinates and executes an IPO) for a premium beyond your $10 purchase price. Once made available on the public markets, the stock may climb even higher as Wall Street traders seek to capitalize on the freshly available investment opportunity.

Although we specialize in alternative IRA investments, New Direction Trust Company allows self-directed investors to hold publicly traded stocks and mutual funds. As such, if your privately traded retirement assets go public, you will not be required to liquidate your positions or transfer your holdings to another IRA custodian.

The company whose stock is owned by the IRA must un-restrict their shares (i.e. make them ready for public markets) to allow for re-registration. Individual companies may utilize unique processes for un-restricting their shares and taking their equity public. We will happily assist you however we can, though the issuing company may be better suited to help you navigate the nuances of their specific procedure.

Once your IRA-owned shares are un-restricted, here’s what we will need to re-register your privately traded assets for inclusion in your self-directed retirement portfolio:

  • Letter of Intent – This signed document confirms that, as a shareholder of the applicable stock, you acknowledge and accept the re-registration of your IRA-owned assets. Please see your accountant or legal professional for assistance in completing this document.
  • Account Statement – Please provide any available documentation from the issuing company that shows:
    • Clear identification of the issuing company.
    • Confirmation that the shares are titled in the name of your account.
    • The number of shares your account owns.
    • The value (total or per-share) of your account-owned positions.
    • If available, the company’s ticker symbol (the abbreviation that appears on public exchanges, such as “SPX” for the S&P 500 index).
  • Internal Documentation – Contact our office for the appropriate internal paperwork required to document these transactions.

New Direction Trust Company does not have the infrastructure to allow for active trading at this time. However, we are proud to offer custodial services for stocks and mutual funds and look forward to helping you with an IPO of your private equity holdings. For more information about self-directed investing, feel free to give us a call at 877-742-1270 or send us an e-mail at info@ndtco.com.

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