Edit: ahh, I think I see. The terrible losses you incurred happened some time ago. We were worried about you man, you seemed on edge there, especially when you were ripping into Max Headroom Morse. He's a hoopy frood, no need to bite his ankles.
LOL, it happened two years ago, sorry if im excited but every time i think about it i just want to see this piece of shit once so i can deck him. My whole life changed cause of that, had to restart with a 50k account and sell a rental property, plus i no longer had a strategy, because i needed the leverage the prop firm was offering to make my strategy viable. When we talked to a lawyer i couldnt even believe how limited our options were, and how standard prop shop contracts basically make you sign off all your rights. This is the reason i would recommend not to go to a prop shop, im not pulling it out of thing air, i got torched for everything i had at the time, and there wasnt a damn thing i could do about it, thats why im saying avoid a prop shop if you dont need the leverage.
Having said all that what ensures that smaller clearing firms and custodians in the US are safe? I trust large established houses such as UBS or GS a lot more than Wedbush and Co. What happens to my funds beyond the SIPC protection cap? I would be fully exposed to a total loss beyond, was it 100k Usd? In that regards going with a more reputable, established, and above all, larger firm always pays. Of course that only applies to those who have a choice.
GS and USB have government insurance, if they walk out on you the government covers your account up too 250k i think. Thats the difference. With a prop firm there is literally nothing you can do if some cocksucker walks off with your money, unless you got hundreds of thousands to chase a law suit, in which case you will get less than you deposited back.
Even that is meaningless for someone with 5 or 6mln in the account. IB in the past purchased private insurance from Lloyds of London I think it covered up to 10mln of non trading related losses per client account if I remember correctly. Not so anymore.
I do not know the exact details of how the protection works...I only know that I am totally comfortable with it at this stage of my account's size. For details, speak with your particular broker to find solace and understanding of how much you are protected for.
But chances of a meltdown are orders of magnitude smaller with a large established firm compared to the Wedbush family shop type of clearers and custodians
I do and my funds are held with a large international bank. And I recommend others to consider that as well if they have the chance to choose who safekeeps their funds. All you need your bank to do is issue a letter of credit and most brokers are willing to work with that