2006-12-05 07:11:08 · 5 answers · asked by druglord 2 in Business & Finance ➔ Investing
No, you won't lose your money... it's insured through the SIPC. The FDIC works only with banks and bank products, but SIPC is there for investors. Check out the source.
2006-12-05 14:44:47 · answer #1 · answered by Mike S 7 · 0⤊ 0⤋
You are safe as long as the broker is insured by the FDIC (federal deposit insurance corporation), which is the government-backed company that insures money deposits in banks and brokerages. In a bank at least, the FDIC covers accounts up to $100,000, and retirement accounts up to $250,000. If you hold more than this, you COULD lose money. I assume the rules are the same for brokerage accounts. This is why most people don't lose money when someone robs a bank (they are really taking the government's money, not yours) as long as your bank is FDIC insured. IF, however, your brokerage (or bank) is NOT backed by the FDIC, yes, you could lose most, if not all of your money if the brokerage goes bankrupt. The creditors to the brokerage have the first legal claim to the brokerage's assets (that is, banks and investors who loaned the brokerage money) and will get as much as they need from the brokerage. Technically, your money is a liability to the bank/brokerage (they owe you as much as you deposit there, but actually have the money/securities as an asset), but in the event of bankruptcy, I believe you get the money after all the "true" creditors' claims have been satisfied. This is why it is so important to make sure you use only FDIC-insured brokerages and banks, unless you have so much money in the bank/brokerage that the $100k or $250k is not a huge risk for you. I suggest you look into the specific laws concerning this because what I have just said is subject to change and possibly not entirely accurate.
2006-12-05 08:21:27 · answer #2 · answered by scottrc5391 3 · 1⤊ 0⤋
You will spend a lot of time in bankruptcy court, but you can at least get your original investment back. Advice for future: invest in a company like Merrill Lynch who actually buys the stock and then deals it to their clients.
2006-12-05 07:24:10 · answer #3 · answered by cmruland 2 · 0⤊ 0⤋
It won't happen, brokerage account is insured not by FDIC but by SIPC, it's basically the same thing, your account is protected and insured by the federal government.
2006-12-05 14:43:36 · answer #4 · answered by koko 2 · 0⤊ 0⤋
depends which country you are in, some have protection schemes
2006-12-05 07:18:48 · answer #5 · answered by SeveralTimesWrong 5 · 0⤊ 0⤋