Employyes’ options to buy company’s share : employees option to buy company’s stocks and 401 K

Fatawa Question

Salaam Alaikum. I talked to you on the phone the night before last and here are my questions. 1. Stock options program : I read that it is haram to trade in options. How about the company giving me options to buy (within 10 years) a number of options with a fixed price ? There is the condition that I can't fully exercise them till after 4 years (1 / 4 each year). They may be granting me other options in the future (to keep employees). In this program I have no choice. I have been granted those options upon my acceptance of the job. 2. 401 K program : in this program I have the choice to participate or not. A percentage of money is taken from my payroll (before taxation). Matched (each Dollars the company will add 50 cents to certain limits). I can't use this money till I am 59 years old or if I leave the company. The money will be invested in one of the following funds (I can choose). Euro pacific growth fund (class A shares) Fremont institutional U.S. Micro-Cap Fund (class A shares) KLA-Tencor common stock fund New perspective fund (class A shares) PIMCO total return fund (institutional shares) Seligman communications and information fund (class A shares) The growth fund of America (class A shares) The income fund of America (class A shares) Van Kampen emerging growth fund (class A shares) Washington mutual investors fund (class A shares) Wells Fargo S and P 500 stock fund Wells Fargo stable asset fund 3 Employee stock purchase plan : I have the choice to participate in this plan. The company keeps a percentage of my payroll (up to 10 %). By the end of the period (6 months), the company buys me with that money shares at 85 % of the lowest price between the beginning and the end of the period. Example : I saved $ 1700 during the 6 months. In the beginning of the period the share was $ 120 and in the end dropped to $ 100. I will have 1700 / (.85 * 100) = 20 shares. I can sell those shares strait with 100 * 20 = $ 2000. 4. Life insurance : the company is buying me the basic of life insurance (I have no choice). I have the choice to buy more. What is the ruling ? 5. You may not answer this question (it is kind of financial advice). I want to start dealing in stock in future. Can you give me a list of symbols that are permissible by Islamic rulings. I have no idea about the numbers and percentages that are conditions to deal in a company stock. Jazaaka Allah Khairan. The answer to these questions will not help only me. I have many brothers that have the same questions and they avoid to deal with many things just because they don't know. I am sure that we missing many Khair by avoiding it that way. Salaam Alaikum. Sincerely Ali.

Fatwa

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Publication Date

2000-12-18

Main Subjects

Economics & Business Administration
Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Islamic economics
• Financial markets
• Employees
• Stocks
• Corporations

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-726878

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• MLA
• AMA