A stupid question...

Discussion in 'Retail Brokers' started by daniel123, Mar 14, 2001.

  1. daniel123


    Hi,I am new to online trading,but I have a stupid question:

    what if a online broker close because of financial problem,
    will the uninvested money in the broker insured?
    or just all gone?

    Thanks for your help!
  2. daniel, I'd check with your broker, what kind of insurance they have. Minimum should be SIPC Coverage. If they don't have even this minimum, I'd look for another broker asap !

    SIPC coverage

    The Securities Investor Protection Corporation (SIPC) provides protection to customers of United States Securities and Exchange Commission ("SEC") registered broker-dealers who are members of SIPC against losses that arise from the financial failure of such broker-dealers. SIPC is a non-profit, membership corporation funded by broker-dealers which are members of SIPC.

    Basic SIPC coverage is up to a maximum of $500,000, including up to $100,000 in cash. SIPC coverage includes securities such as notes, stocks, bonds and certificates of deposits (known as "protected securities"). SIPC also covers warrants and rights to purchase or sell (equity options) or subscribe to the protected securities. SIPC does not cover losses due to changes in market conditions; does not cover securities that are not registered with the SEC pursuant to the Securities Act of 1933; and does not cover commodity futures or commodity options contracts.

    For more information about SIPC and answers to frequently asked question such as how SIPC works, what is covered, how to file a claim, etc., please refer to the SIPC website at (www.sipc.org), or contact SIPC at:

    Securities Investor Protection Corporation
    805 15th Street, N.W. - Suite 800
    Washington, D.C. 20005-2215
    Telephone: (202) 371-8300
    Facsimile: (202) 371-6728