Under American law,a broker that suffers fraud can sue profitable ex-clients up to 6 years after account closure: See video below. I contacted the FCA as I want to open an account in the UK with IB (who didn't answer my email query) and want to know if I am safe from this law. 2:47 - 7:00 (although the whole video is relevant)
http://www.forbes.com/sites/kotliko...rage-insurance-scam-help-allen-stanford-walk/ If you scroll to the article bottom,his next post will appear.There were several on this subject.
That's why you open a brokerage account under a llc and don't keep more in there then you need to trade with. They can sue you all they want and wont get a dime.
I have been paid out by SIPC before; and it was smooth, timely, and accurate. I don't think that SIPC was ever meant to deal with pure Ponzi's where the manager has total discretion and the investments turn out to be entirely fictitious. Imagine someone starting a Ponzi, raises $1 billion (maybe even from his own family), and gives it all to his own son who invested $1. So SIPC is supposed to pay out $1 billion to the investors, while not forcing the son to pay back the $1 billion? It makes no sense. I have to side with SIPC on this one.