What happens to your stock position if your brokerage firm goes out of business?

Question

How can you transfer your stock position to another brokerage firm?

Answer 1

Some brokerage firms are SIPC insured, if your is one of them it will cover you for $100,000 cash and $500,000 total n sequirities.

Answer 2

Your stock position is protected from being lost by a defunct brokerage house by the federal Securities Investor Protection Corporation far beyond the level of risk of the average individual.

What really happens is, before the company goes out of business, the SIPC, along with the SEC, the NASD and state regulators get together and arrange for a solvent company to take over the brokerage business of the insolvent firm. You need do nothing. All of a sudden, you get a letter welcoming you as a new customer of the acquiring firm. Then you can take your time and decide if you like the new firm, do nothing and stay there, or change brokers and the new broker will have you sign a form authorizing them to do the transfer. Also painless.

Answer 3

Depends...

Normally there is something called a block transfer that will occur. This will cause all your record entries to be custodially transfered to another brokerage house.

The more likely event is that someone will buy them up before they become unsolvent.

Don't worry, the SEC will not allow someone to run with your money.