SIPC protection $500k per account

[ironchef]

My info may be old (years ago I was a Principal)... but the way the regs read back then regarding this... "SIPC insurance covered stocks/cash MISSING" from an account... for ANY reason... up to the limits of SIPC coverage.

Thanks. So what happen when the account exceeds limit? For bank deposits, FDIC always covered beyond limit.

 

[Quanto]

Then we have this case:
Account started with $100k, opened a LongStock position and current account value is say $250k, ie. with the unrealized profit.
What happens in the event of a broker bankruptcy: how is this account evaluated by the SIPC? As $250k or as $100k?

 

[ironchef]

https://www.sipc.org/news-and-media/news-releases/20160209#:~:text=“SIPC is pleased to have,100 percent of allowed claims

Thank you. Appreciate the link and answer.

 

[Robert Morse]

This was in many ways worse than Bear Stearns because I think the management at MF Global used customer funds to trade firm money. At BS, they lost their money trading. That was why it took so long.

Thank you. Appreciate the link and answer.

 

[newwurldmn]

"How do you tell someone you are a failed trader without saying you are a failed trader?"

"You ask about SIPC protection for your 25,000 cash account."

 

[destriero]

"How do you tell someone you are a failed trader without saying you are a failed trader?"

"You ask about SIPC protection for your 25,000 cash account."

Too many zeroes.

 

[traider]

This was in many ways worse than Bear Stearns because I think the management at MF Global used customer funds to trade firm money. At BS, they lost their money trading. That was why it took so long.

So did coustomers lose all their money with MF Global?

 

[engineering]

But still it seems only max $500k per person is protected, not per account. Isn't it?

I've never checked. I'm not very worried about Schwab and Ibkr going bankrupt on the same day.
I suspect that would be the result of such a big Marco event that the government might very well choose to ignore whatever the law says anyway, like it did during covid.

I'm more concerned with the relatively frequent outages, ransomware attacks, etc.

I believe it was also quite some time before MF global's customers were made whole.

 

[Quanto]

Then we have this case:
Account started with $100k, opened a LongStock position and current account value is say $250k, ie. with the unrealized profit.
What happens in the event of a broker bankruptcy: how is this account evaluated by the SIPC? As $250k or as $100k?

The answer is:

SIPC does not safeguard the absolute value of the securities the customer holds, only the number of shares.

Source: https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp

 

[Robert Morse]

They were all made whole on the securities side, it just took time. I'm not sure about the futures business. You would have to do a search for that.

So did coustomers lose all their money with MF Global?