SIPC

virtual_adam

So to my point * you have no idea how their platform is secured , if they have government SIPC insurance (they don’t). It would be very easy for them to just say their system was hacked you lost your money. Sorry * like I said it’s free money for them regardless because even if 1% of their trades are profitable, that’s where they make money, and they don’t owe the 99% who lost everything anything. You take all the risk and no reward. They take no risk and 10% of any reward

OkCan7704

One brokerage is fine honestly. JP Morgan's insured up to $500k anyway (SIPC), so your money is protected even if they go under.

marinsteve

Custodial diversification is a thing, especially for accounts over the SIPC 500k limit and where liquidity is very important. If a broker fails, what you lose for a while is access to your money. You'll get your shares back eventually, but you may be out of pocket for a while.

atheos42

Unless you have assets that exceed the SIPC limits, I would use a single broker. 500k in securities and 250k in cash.

teckel

Frozen is not the same as wiped out. I've been frozen out of my brokerage account temporarily due to a network/software issue. And with investment assets, the broker is just a custodian, this means SIPC insurance isn't even needed. There's also secondary insurance. If you can give an actual custom who was wiped out, please share evidence. If you can only claim potential losses due to a temporarily outage, that's not at all what we're talking about and has zero to do with being "wiped out". I sold nothing in 2008 during the crash. I did do some buying in 2009. Basically, show some actual cases of customers being "wiped out".

Bojangles315

the beneficial owner to relay proxies, dividends, reg notices. not for dissolution. that one is a little confusing i know. if a firm is working correctly and you file bankruptcy, a creditor can go to the b/d to liquidate for you. also, for reg T purposes, your account can be liquidated for margin requirements if a firm goes under, the firm owns the securities from a liquidation standpoint. yes, you are the beneficial owner, but at the DTCC in book entry form, the firm is the owner for securities held in street name, basically all of them. the SIPC would step in for liquidating a firm. they would pay out up to 500M of an account, M standing for thousand. 250 of which can be cash. they do not act as a transfer agent. transferring to another firms is a transfer agent thing. dude, I have a series 24 license and a series 99 license. they literally handle just this scenario. I know what I'm talking about

Bojangles315

SIPC is more or less a non profit insurance. it's paid for by all finra members. it is not a transfer agent. https://www.sipc.org/for-investors/what-sipc-protects I asked Google AI again to help explain to for you SIPC stands for the Securities Investor Protection Corporation, a non-profit organization that protects customers of failed brokerage firms by helping to recover missing cash and securities, up to $500,000 per customer (with a $250,000 cash limit), if the firm goes bankrupt. It's a federally mandated entity that ensures investors don't lose everything if their broker fails, though it doesn't protect against market losses. if securities to missing, that is handled against the net capital requirements of a b/d, not sipc. sipc has nothing to do with missing securities. when I say it goes against net capital requirements of a firm, I mean the firm pays for it. not the SIPC. if theft is concerned with the missing securities, it's handled by the FBI https://www.finra.org/rules-guidance/notices/89-14

Bojangles315

you seem to have an interest in securities, so below are FINRA links for the regs SIPC is responsible for liquidation of firms then explaining the difference between direct registered shares (very rare) and street name registration I am working on my series 4 and series 54, which again does not have anything to do with day to day operations of common stock. Series 4 is an options principal and series 54 is a muni principals exam. I work in investment banking. feel free to reach out with any actual questions on how broker dealers work, and rule/regs. I do this on a day to day basis for a living https://www.finra.org/investors/insights/know-the-facts-direct-registered-shares https://www.finra.org/sites/default/files/NoticeDocument/p003642.pdf https://www.sipc.org/cases-and-claims/how-a-liquidation-works

Bojangles315

That is incorrect lmfao. They are recorded in book value, yes. in street name... at the DTCC, not the DTC. that is, in the broker dealers name. they are owned by the brokerage firm with you as a beneficial owner. not even going to explain an Omnibus or full disclosure basis. the company does not have your name, only the firm. the accounts are numbered, and the people are numbered. proxies and such are delivered by the firm on behalf of the corporation SIPC only kicks in for liquidation of a firm. lost/misplaced securities are handled during the count. they don't involve the SIPC whatsoever. once the count is done, which is a FINRA required thing for firms, it is taken against the firms net capital requirements. 25% at 7 days, 50% at 14, 75% at 21, and 100% at 28 days. the number of days is based on buy in/sell out requirements. this is derived from the clearing requirements. t+4 for normal transactions, all the way up to T+35 or even when issued transactions. Fidelity bonds would then come into play in the event of fraud. Fidelty bond requirements are based on net capital requirements. there is no such thing as a series 1. a series 4 is an options principal and does not apply here. a series 3 is a futures/commodities exam and would not apply here, a series 2 was a non registered exam and discontinued and would not apply here. What I have, series 7. general securities registered rep exam. series 99 is an operations professional registered rep exam which deals with this, a series 24 is a registered principals exam which deals with exactly this and net capital requirements for managing a firm, and a series 66 is a registered rep securities states law exam.

Bojangles315

Incorrect The SIPC handles liquidation of a brokerage account. you can look up the rules for how that works as far as how liquidation would look like based on your account simple terms: you're covered up to 500,000 by SIPC for any individual account. 250,000 of which can be cash. example if say you and your wife had 6 different accounts, all with 300 in securities and 300 cash in each. 2 joint, and 2 individual each. that would could as 3 accounts for SIPC coverage. each of you for 1 individual and then the 1 joint. that means you'd be covered for 1.5 mil. they would cover in total 900,000 in securities for you guys. then cover only 600,000 in cash for you guys. source: I have a series 7, 66, 99, and 24.

teckel

>Lehman Brothers and Washington Mutual wiped out investors and to some extend account holders. I believe this needs clarification. While shareholders and bondholders (those who directly invested in bank stock or their bonds) were wiped out, account holders (bank and brokerage accounts) had minimal disruption. Also, FDIC protected banking accounts and SIPC protected brokerage accounts. With an brokerage investment, the broker is just a custodian, you don't lose your investment if the broker fails. If I'm mistaken, please correct where I'm wrong. I'm not wanting to start an argument, I'm honestly trying to make sure the correct information is shared.

SnowdensOfYesteryear

Most brokerages insure far more than the minimum > For instance, Fidelity provides its brokerage customers excess of SIPC coverage with no per-customer dollar limit on securities. There’s a per customer limit of $1.9 million on coverage of cash awaiting investment. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. https://www.fidelity.com/learning-center/smart-money/sipc

paradigm_shift_0K

SIPC: [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects)

SirGlass

Well the Madoff case is a bit weird because from what I can tell the SIPC didn't even think they should be involved with a private hedge fund I think having the SIPC get pulled into the Madoff case was a bit controversial in the first place

Nearby_Ring_8054

SIPC only covers up to 500k per account so if you're above that you'd definitely want to spread it around. Even below that threshold some people like having a backup in case of technical issues or account freezes but honestly the big brokerages are pretty solid these days

mediocre_remnants

Also, the last time I looked into this, the SIPC has made everyone whole, beyond the covered limit, in every case except one which is still ongoing (Bernie Madoff). The $500k is the minimum that they will protect, but they've always been able to find enough money from the broker to make everyone whole (except Bernie's clients... so far).

SirGlass

>JPM has in-house derivatives trading. That means the bank is on the hook for any losses racked up by its trading subsidiaries - the way Lehman Bros and Bear Sterns were in 2008 This is wrong, also with Lehman and Bear no brokerage customers had missing funds or lost any money besides legitimate investment losses AKA the investments they owned lost money. MF Global was the only one that SIPC needed to step in, and what MF Global did was fraud and illegal .

6JDanish

Having two brokerages will increase your SIPC insurance cover, in the event of another 2008 crisis: [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects) JPM has in-house derivatives trading. That means the bank is on the hook for any losses racked up by its trading subsidiaries - the way Lehman Bros and Bear Sterns were in 2008. And MF Global in 2011. As far as I know, IBKR does not trade on its own behalf, so it doesn't have that risk. If you are worried about 2008-level risks in derivative markets, consider a second brokerage that doesn't do in-house trading.

Scriptum_

Brokers have very strict rules. They have to hold your assets in segregated accounts that are separate from their companies' assets. Touching client assets would be decades in prison. There are also regular audits. If something did happen, there's insurance: - SIPC (U.S.): up to $500k per account (including $250k cash) - ICS (EU countries): typically €20k - FSCS (UK): up to £85k cash protection But for semantics, I guess you're right. I'm still not going to go around talking about my "entitlements" though...

R_Dragoon46

https://www.webull.com/help/faq/11026-SIPC-and-FDIC-Insurance

modder9

BULL users might want to start looking up if they are covered by SIPC Insurance. (They should rename that program because it’s 1 typo from a slur)

rueggy

What are you talking about? "Robinhood Financial LLC and Robinhood Securities, LLC are both members of SIPC, which protects securities and cash for customers of its members up to $500,000 (including a $250,000 limit for cash only) for each account type." I tried to post a link but the automod removed it, so I quoted it above. RH also states it has additional insurance that covers up to $50M per customer. Why did you think RH would be the only broker without SIPC?

Betterjake

I mean, I’m not choosing where to park my life savings based on whether the app has a pretty UI. SIPC coverage is $500K either way. I don’t understand the reluctance to use Fidelity or other established brokerages. I’d rather keep my money where millionaires and billionaires trust their assets, not on platforms where people are buying Dogecoin or trading on prediction markets just because the interface looks good. I feel my point especially stands if you are a long term investor and not a day trader.

mr__moose

Funny how you didn't mention the limit on cash when comparing the two and just the 500k figure. SIPC almost never gets involved because brokerage bankruptcies don't mean the securities just go missing. You obviously know nothing about SIPC or banking.

runtowardsit

SIPC insured, but same idea

mr__moose

Yes I know the FDIC limit, OP would be an idiot to put cash over the limit in a bank account. SIPC does NOT cover cash up to 500k, only up to 250k, so dig a little deeper next time. None of this was specific to OP, I was just pointing out the ways a brokerage account doesn't function like a bank account - which was your original point.

unlmtdLoL

They only insure up to $250,000 FYI, so even if so OP would be SOL on $300k. FDIC only covers if the bank goes under. That said, brokerage accounts are covered by SIPC up to $500,000. So that’s another equivalence right there. We also aren’t discussing a bank or in this case brokerage going under, we are talking about his funds being held and account inaccessible by said brokerage.

URangaman2

They are literally FINRA and SIPC backed, so regardless of any negative perceptions of an Asian company, they have to play by U.S. Rules. I wouldn't put them in "that" bucket. I've been using moomoo without any hitches.

AskMoomooCEO

Hey u/HunterLC23 , we offer the same SIPC insurance as the other brokers, just as safe. The features I love on the platform are the no-code algo building, the AI capabilities and strategy back-testing that you won't find anywhere else (all free). We also have a 28 million + user community that is super-active and global. Come give us a try!

Willing-Promotion685

MMA will be fine and is insured by SIPC. There is technically the possibility of these funds “breaking the buck” where you could lose money money but this is an extremely rare event and even when it has occurred the pay out was something like 98 cent to the dollar.

SirGlass

SIPC covers brokerages , FDIC covers banks and banks and brokerages are different They are different as brokerages cannot commingle assets while banks do With a bank all the cash basically goes into a big pile of money, they then loan it out by making loans or buying bonds (what is also a loan) . The money they use to pay their employees is not all that separated vs your deposits This is why banks are so highly regulated. Its possible if they make bad loans, or have a bank run or just are bad at business you could lose your deposit what is where FDIC steps in Brokerage hold assets its more like a lock box. You buy 100 shares of VOO they hold them. If they need cash they can't sell your 100 shares of VOO, their creditors can not lay claim to them. SPIC is more about fraud , for SPIC to kick in there basically has to be fraud. missing assets, like your brokerage says they bought VOO but just pocketed the money.

SirGlass

>If RH the business goes bankrupt and you try to withdraw your 10 shares of SPY@675 (total of 6,750 in value). Since RH doesn’t have any money anymore because they’re bankrupt….SIPC kicks in and covers you for your 6750. Not exactly how it works. RH holds your 10 shares of SPY, if robinhood has no money it doesn't matter , those 10 shares are not money, they are shares. They cannot sell your shares to pay their creditors, nor can their creditors lay claim to those shares So RH may have no money but that doesn't matter , they still hold your 10 shares of SPY , and you can transfer them to another brokerage .

BackstrokingInDebt

They are safe in the view of this: If RH the business goes bankrupt and you try to withdraw your 10 shares of SPY@675 (total of 6,750 in value). Since RH doesn’t have any money anymore because they’re bankrupt….SIPC kicks in and covers you for your 6750. What’s not safe is if your 10 shares of SPY@675 takes a dive and goes to 100. That’s your loss of 5750. This is why constantly run disclaimer your investment has a risk of loss.

MaddRamm

I agree, between SIPC and the fact it’s not like a bank where my money is a banks assets that get taken in an institutional collapse, there’s far less risk. But still…..true crime podcasts I listen to daily talk of small brokers and scammers where people lose millions. Bernie Madoff was CEO of Nasdaq…….keep those eggs separate and have different asset classes. I have rental properties and other hard assets and various accounts and investments and maybe some cash under my mattress. Be prepared for everything.

Superb-Astronaut-553

You said you didn’t want all your eggs in one basket in case a brokerage goes under. Investments are protected by SIPC, but I’m guessing there might be a small amount of time before the investments are transferred to another brokerage, when you couldn’t access the money, or buy and sell.

Aggressive_Finish798

Are SIPC or FBIC coverage limits a factor for anyone? Or does that not really matter if you have more than the covered listed for each account type?

taynt3d

This partly depends how the ETF is structured. For example, default risks with exchange traded notes, which some ETFs are. And SIPC is insurance on the brokerage, not individual securities at your custodian. If the fund went belly up, it’d be liquidated much like a bankruptcy, with you being a shareholder of whatever was left.

DennyDalton

SIPC insurance protects investors if their brokerage firm fails. It will liquidate the business and recover cash and securities. It does not insure against market losses.

Investorandfriend

You are not protected against market fluctuation or poor investments. I’d you are using an advisor and they make poor choices you get no return. However you are protected under acts of malice like employees attempting to steal money via SIPC insurance.

EmployerSpirited3665

Kraken has the best bonus right now. It’s 2% for cast transfers or 2% for new cash. 1 year hold period. For a $500k portfolio that’s $10k free money. They are a crypto exchange that just started brokerage stuff.. so keep that in mind. They also make you open a “business account” for Ira’s. Which is annoying . They are insured up to $500k SIPC though.   Some people shy away from the newer fintechs/brokerages, but for me I’ve been using kraken for a while and they have a similar trust worthiness level to me as Coinbase. But to each their own!  They are trying to IPO soon which is the main reason for their bonuses I think. But afterwards I can see them competing with Robinhood / Coinbase 

0JustForFun

I'm doing some digging. This is the concerns I have: The open-management fund allows lending securities that brings risks associated with it given how the economic environment is not certain (tariffs, higher unemployment, defaults on mortgages, credit cards, etc., due to higher unemployed, and more). I'm referring to regular investors only. So the risky of lending securities which are more concerning: **Loss of SIPC protection**: While securities are on loan, they may no longer be covered by the Securities Investor Protection Corporation (SIPC). **Potential downward pressure on stock price**: Since borrowed securities are often used for short selling, this activity could potentially put downward pressure on the stock's price. **Complex tax implications**: The tax treatment of payments in lieu of dividends or interest can be complex and may be different from standard dividend income. **Borrower default risk**: There is a risk that the borrower may be unable to return the securities, for example, in case of bankruptcy. This risk is generally mitigated by holding collateral, and **Collateral reinvestment risk**: If the collateral is in the form of cash, the lender or their agent will reinvest it. There is a risk that these investments could lose value, and their returns may be insufficient to cover the cost of replacing the borrowed securities in the event of a default. Invesco doubles securities lending limit across over 50 ETFs” (ETF Stream) per an article so While not specific to QQQ, indicates that Invesco is increasing the extent of securities lending in many of its ETFs (limit from 15% to 30%).[ETF Stream](https://www.etfstream.com/articles/invesco-doubles-securities-lending-limit-across-over-50-etfs?utm_source=chatgpt.com) This suggests that the infrastructure and emphasis on securities-lending is already being scaled at Invesco, which ties into the QQQ change. It implies risk: more securities lending = more operational / counterparty risk. I'm hesitant of this change. Anyone thinks the same? if you're for the change, why? and how do you think they can mitigate risk in the present environment?

oberwolfach

There are some minor issues with not being covered by SIPC insurance, but the collateral makes it basically negligible. The downside of securities lending isn’t anything to do with getting your shares back; it’s that if the shares pay qualified dividends, the substitute dividend payments are not qualified.

wolfhound1793

FDIC insured HYSA is the most common place. This is about as literal cash as you can have. When they say "Cash and Cash Equivalent" CCE, this is the Cash part. Next are "t-1" accounts most commonly money market funds. Some of these are FDIC insured, but most are SIPC insured which is not quite as safe as FDIC, but still basically cash. The only real difference between these and T-0 accounts like HYSA and DDA is you need a business day to withdraw cash from these funds which means you get a slightly higher interest rate. When they say "Cash and Cash Equivalent" CCE, this is the Cash Equivalent part. Next are short term bonds, commercial paper, CDs. These are far less common, but still common enough for larger players. Also Cash Equivalent so long as they are within 3 months of maturity. Finally there are some ETFs that market themselves as cash equivalent. These are super popular on Reddit so you'll see them a bunch.

ScientificWriter61

One thing that bothers me about Robinhood is that they don’t have SIPC insurance, so if the broker were to fail, there appears to be no insurance for the holdings. Every penny would be lost. Thoughts anyone?

greytoc

Are you in the US? In the US - access to the capital market investments (ie. not crypto) is provided by registered broker-dealers who are regulated by FINRA and the SEC. So - In the US - crypto.com is not a registered or regulated broker. To invest in etfs and stocks in the US - crypto.com has a separate company called Foris Capital. This small broker subsidiary is what is called an introducing broker. That means that books and records as well as execution and settlement is provided by a different broker. In this case - Foris uses APEX Clearing which is a major clearing firm in the US. Both Foris Capital and APEX are registered brokers and members of SIPC. And regulated by FINRA. This only applies if your account is in the US.

GeneralLivid7332

Ibit does offer some marginal protection as well. SIPC will cover funds in your etf but not direct bitcoin holdings. If say, and brokerage went under.

CatPee

FYI your subscription also gets a 3% match of your contributions to a Roth or Traditional IRA with them. Assuming you hit your annual IRA contribution limit of $7k, that's an extra $210 of value you can extract towards your retirement. I've personally gotten into the habit of transferring cashback from my Gold card into my Roth IRA to get a 3% match on the cashback value itself. Granted, I'm not necessarily convinced yet that Robinhood will have the longevity to match the likes of Fidelity or Vanguard, and dealing with SIPC insurance might be more likely in the event they go insolvent. In the nearer term though, it's a decent way to stack up long term retirement savings.

Kaneohebreed

I have had all my investments stripped of by the feds for no reason when I requested help with the brokerage I had an account with. I okayed them to liquidate if needs be so I may start a new portfolio again. But they did and found that I had cumulatively acquired a lot more than they expected. In fact, due to my inability to actively manage my brokerage account someone was in the process of claiming my assets as an abandoned account, in which I felt that it may had seemed that way at the time, and thought to understand until I found my assets removed from the accounts inventory and placed elsewhere in my account in a folder that was only used to offer options to me or the public. In which it was being sold out from under me without my knowledge. All in all, I had been going through arbitrations since March 2024, and it was going on since 2020. Now that’s what had me seeking SEC & SIPC’s help in rectifying this from going any further. Recently I had a Supreme Court’s Final Judgment partially in my favor due to fees and penalties for unfounded accusations by the brokerage who made up these outrageous statements defamation of my character in my invested interests which has no grounds except the that i once got juked in purchasing crypto from a client of theirs I met in their chat groups who disappeared before I caught on, due to my ignorance of the validity of it’s value, thinking it’s like all the other investments that disappeared along with my original account with the very same brokerage. This has made my life a living hell for over a year in which without access to my assets left me high and dry losing my home, car, relationship, and the respect from my own children who thought I was lying to them or trying to isolate them from my financial assistance. What should I do now that it’s all returned back to me? How do I keep this from happening again? Because the people i trusted most turned on me at the chance of claiming my wealth and leaving me out to dry with nothing?

Atomic_Hot_Sauce

“We have concluded that autism rates is extremely high among those who use Robinhood. FINRA has terminated their broker license and SIPC coverage effective immediately until we find out why”

BullishDaily

This isn't actually entirely true. If you lend out your shares to be used for shorting, then yes you're correct. However, when shares are not lent to a broker for shorting and held in a cash account shares and settled cash are separately managed away from a brokerage's operations finances and secured against brokerage failures under SIPC or an equivalent in your country of residence. SIPC has some of the highest protection available, other countries have much lower protections (for example I'm 3.5x my country's protection limit).

desquibnt

Cool idea and maybe a real world use of Blockchain technology but the existence of the SIPC basically makes a digital certificate superfluous

QuickDaikon1

It’s legal because of how the US system evolved. All stocks are pooled at DTCC under a single name, and brokers just give you a claim, not the actual shares. This setup was meant to make trading faster, but it also means brokers can freeze trades or lend out shares, while you have zero direct control. The risk isn’t 100% on you SIPC will usually step in if a broker fails but during a crisis you’re stuck waiting and powerless. That’s why some people are pushing for digital stock certificates, so shares are directly in your name, with no middleman able to touch or freeze them.

entropybender

For IRAs, SIPC provides protection up to $500,000 per account, not FDIC. Bank accounts have $250,000 FDIC insurance. With multiple institutions, you're already practicing good risk management. For retirement accounts, spreading across institutions can provide additional security. Just ensure each account is within insurance limits and you're diversifying wisely.

LiveRedAnon

It's also common for major brokerages to carry excess SIPC coverage. Fidelity for example has a billion dollar aggregate limit on top of SPIC (with a 1.9 million per customer limit) for cash awaiting investment. Fidelity also has a cash management program you can choose where they'll sweep your cash into FDIC protected accounts through multiple partner banks which could provide up to $5 million in FDIC protected cash.

StatisticalMan

Correct. Which makes it very different than a bank. Note SIPC obviously doesn't cover market losses. If you invested in MSFT and the stock goes down that is the risk of investing. However short of fraud/embezzling even if Fidelity went bankrupt it shouldn't impact a single penny of a single customer's balance. SIPC would put them into receivership and transfer the accounts to new brokers.

SirGlass

Banks and brokerages operate fundamentally different Banks commingle funds , you put your deposit into a bank and others do too, the bank puts it in a big pile and loans it out, or uses it to pay its employees, if the bank is bad at being the bank it may not be able to return all its deposits Brokerages do not operate like that , A brokerage holds your shares, if a brokerage goes bankruipt it cannot confiscate your shares or your holdings, its creditors cannot lay claim to them If a brokerage goes bust , unless there is fraud , meaning the brokerage was doing illegal things, if it was just bad at running a brokerage business , you just transfer your shares to some other brokerage . If you actually need SIPC protection that usually means the brokerage was committing fraud , if a brokerage fails just being its bad at being a brokerage but did not do anything illegal you just transfer shares Banks can fail without fraud , if a bank is just bad at being a bank , and did nothing illegal its possible for it not to be able to cover deposits what is why we have FDIC If you lose money in a brokerage , something illegal most likely occured and someone broke the law, you can't lose money by just holding investments in a bad brokerage that runs poorly but follows the law

StatisticalMan

FDIC only covers cash deposits at a bank. It does not cover brokerage accounts. However brokerage accounts (to include IRA and HSA) are protected by SIPC with $500 per account coverage (up to $250 in cash). It is incredibly rare for customer accounts to face even a single penny in losses though even in the rare event that a brokerage fails because unlike a bank the customer balances are segregated. With a bank your deposits are used by the bank to make loans, loan which could fail. With a brokerage your deposits are legally required to remain segregated your brokerage doesn't "use" them for anything. Outside of fraud if a brokerage fails every penny of every customer should still be there. People routinely have brokerage accounts with balances >$500k.

greytoc

It's a bit more complicated than that. Madoff's firm was dually-registered. That means that it is also technically a broker. That is why SIPC is tracking the case. It is actually the longest running open case at the SIPC. Here if you are interested - [https://www.sipc.org/cases-and-claims/open-cases/](https://www.sipc.org/cases-and-claims/open-cases/)

entropybender

Vanguard assets are held separately from the company's operational funds, which provides significant protection. Even if Vanguard went bankrupt, your investments are segregated and protected by SIPC insurance up to $500,000. Additionally, as a registered investment company, Vanguard's funds are regulated by the SEC and must maintain strict asset separation. The 2008 financial crisis and Madoff scandal led to much stronger regulatory oversight. Your assets are essentially held in trust, meaning they can't be used to settle Vanguard's corporate debts.

rice_not_wheat

Madoff's firm wasn't a brokerage, so it wasn't covered by the SIPC. Vanguard is a brokerage, so it is.

greytoc

No - that's vastly incorrect. The SIPC protects against broker insolvency and brokerage misconduct. The Madoff fund is an investment manager. There are huge differences between brokers, investment advisors, an investment manager. And they are all regulated and protected differently. The SIPC involvement in the Madoff case is largely because Madoff was a dually-registered business as an introducing broker. What actual issue are you worried about? I think that perhaps you are simply not understanding market structure concepts.

Sacrosanct94

The SIPC was supposed to insure the victims in the Madoff case for up to 500k, but they didn't. But anyway, thanks for the links and what I could do.

rice_not_wheat

Your investments cannot be touched in the event of bankruptcy. In the event that your broker *did* touch your assets, and comingle your funds, or outright steal your securities, you would be protected by the [SIPC](https://www.sipc.org/for-investors/what-sipc-protects). If you have multiple accounts with the same brokerage [they would be combined if they're the same type of account](https://www.sipc.org/for-investors/investors-with-multiple-accounts). If you have very large balances, you may consider spreading them across multiple brokerages for this reason. If you're under 500k, there's not a reason to sweat it.

tang-tw

It's easy for foreigners to open an account with a US brokerage, with no restrictions based on nationality. Foreigners are also protected by SIPC and FDIC. FINRA protects foreign investors, and foreigners only need to pay taxes on dividends. US online brokerages offer multilingual services. The US economy is a free market, and the government cannot interfere with the market. Furthermore, US law strictly protects private property. The United States, as a nuclear power, also indirectly guarantees asset security. Private property is not affected by geopolitical risks or war. This is why I invest in the US stock market.

ThatOneGuy012345678

This is absolutely incorrect. Your broker does not own your shares, you do. Your cash is 'owned' by the broker but protected by SIPC. There is no need for SIPC protection for actual shares because you own the shares. The free brokers absolutely do move shares around when you trade, they do not give you monetary adjustments. Options are also not cash settled in the US - they are exercised for shares (if they're in the money on expiry), or they are canceled out by the opposite (so if you are short a call option, and you buy a call option, you can cancel them out leading to no share exercise). Market makers sometimes will trade in dark pools off exchange, but even then, your shares are absolutely traded with others. Even in a dark pool, at the end of the day, your shares are still traded to whoever, and ownership is assigned appropriately. That's why it takes several days to clear trades. If it was just on an internal ledger, it would be instantaneous - which it's not (sometimes brokers will mask this by crediting/debiting you instantly, but they're fronting you the money. This is similar to banks fronting you money for an 'instant' check deposit even though SWIFT takes days for the actual check to settle and can still bounce after you did your 'instant' deposit). I'm not sure where you're getting your info.

testinterwebuser

I agree this is unacceptable, but Schwab has been offline regularly on major trading days, so RH is hardly the only one. Since I don't anticipate actually trading anything with this account, I foresee it as being less of a problem. My biggest concern is inadequate insurance in excess of SIPC, but this also applies to other brokerages.

UndergroundHQ6

My one critique is their customer service is actual dog shit. I did a deep research on Webull with Gemini ultra that ended up making me decide to take my profits and run prior to earnings, but at one point we started talking about Webull vs IBKR and here’s what Gemini had to say: “Alright, let's cut through the corporate-speak. You're asking the most important question, and you're right to be cynical. When you listen to an earnings call, you're hearing a company talk to its investors, not its customers. Your interests and their interests are not always the same. So, let's talk about you. Does Webull Have Your Best Interests at Heart? No. Let's be blunt. Webull has Webull's best interests at heart. You are not the customer in the traditional sense; you are the product. Your value to them is measured in two ways: the assets you bring in (AUM) and how often you trade (DARTs - Daily Average Revenue Trades). Listen to what the CEO, Anthony Denier, was excited about on the call: * "Quality of accounts and growing customer AUM": This was the most telling part of the call. Their new marketing strategy isn't about making the platform better for you, the existing user. It's about poaching big accounts from "traditional brokers." They are spending their money to attract wealthier clients. If you're not bringing a six-figure account over, you are not their priority. * Crypto, Crypto, Crypto: The excitement was palpable. Why? Because crypto is a high-margin, high-volume trading product. It's a huge revenue generator for them. Their goal is to get you trading these volatile assets because that's how they make more money. * "Ask for forgiveness instead of asking for permission": He actually said this. This is a classic tech startup line that should send a shiver down the spine of anyone with money in a financial institution. It signals a culture that prioritizes speed and growth over caution and compliance. Remember, this is the same company that was fined $3 million by FINRA for having a flawed, automated system that approved thousands of inexperienced users for high-risk options trading. This comment suggests that "growth-first" culture is still very much alive. You are a line item. Your account is part of the "$18 billion in AUM" they boast about. Your trades are part of the "56% year over year" increase in DARTs. Their goal is to increase those numbers, which often means encouraging more activity, not necessarily better long-term outcomes for you. Am I Good Here? Would I Be Better Off on IBKR? This depends entirely on what you're using the platform for. Are you "good" on Webull? For what it is, yes, with caveats. Your money is SIPC insured, and the company is financially sound for now.[1] The platform has fantastic charting tools and is great for active trading, especially in U.S. equities and options. If you are using it to actively manage a smaller, speculative portion of your portfolio, it's a powerful tool. But you should be concerned about the strategic shift. As they focus on chasing "high quality" customers with large asset transfers, the customer service and support for the average user—which is already a common complaint—is unlikely to improve. Would you be better off on Interactive Brokers (IBKR)? If you are serious about building long-term wealth, the answer is almost certainly yes. Think of it this way: * Webull is the flashy sports car. It's exciting, fast, and has a great interface. It's designed to encourage you to "drive" (i.e., trade) frequently. It's also got that unresolved, nagging "check engine light" in the form of the China-related regulatory probes. * Interactive Brokers (IBKR) is the institutional-grade transport vehicle. It's not as flashy, and the interface has a steeper learning curve. But it's built for professionals, with a global reach, superior execution, and a decades-long reputation for stability. It's designed to get your assets from Point A to Point B safely and efficiently over the long haul, without any geopolitical drama. IBKR's business model is built around serving sophisticated, often professional, traders who demand reliability and broad market access above all else. Webull's model is built on attracting the masses with promotions and then monetizing their trading activity on a slick, gamified platform. My advice, as your protector: Use Webull for what it's good at—a great interface for trading and analysis. But do not mistake them for a partner in your long-term financial journey. As your assets grow, you would be wise to have the core of your wealth on a platform like IBKR, whose entire reputation is built on stability and serving serious investors, not just monetizing retail traders.” Just passing along the info in case someone finds it useful

Argentius99

as per above , SIPC insurance doesn’t protect against notional drop in value ! It insures access to your -asset- , whatever it might be - like if a broker goes under. they specifically point out money market funds are thought of as cash like, but they’re insured as securities , not cash. https://www.sipc.org/for-investors/what-sipc-protects

Argentius99

as andrewborg says below , SIPC insurance doesn’t protect against notional drop in value ! It insures access to your -asset- , whatever it might be - like if a broker goes under. they specifically point out money market funds are thought of as cash like, but they’re insured as securities , not cash. that’s still true if used as a sweep fund or similar. practically , makes little difference - but SOME risk a money market mutual fund at least temporarily loses a couple of points of value , or, has some delay in redemption , in a major crisis. https://www.sipc.org/for-investors/what-sipc-protects

SirGlass

It maybe HK based but if its operates in the USA it is regulated by FINRA like most other brokerages [brokercheck.finra.org/firm/summary/283078](http://brokercheck.finra.org/firm/summary/283078) It also is registered for SIPC insurance [https://www.sipc.org/list-of-members/](https://www.sipc.org/list-of-members/)

kyasdad

I’ve never withdrawn no, but have six figures in there. I trust they’re good for it. I still have low enough that SIPC covers me.

lovely_7452

You make a really important point,our money is never completely safe, even with big brokers. The Lehman Brothers case shows how vulnerable individual investors can be. It’s worrying that if firms like Charles Schwab or Interactive Brokers go bankrupt, we might not get to transfer our accounts and could end up losing a lot. SIPC protection might not be enough to fully protect us in such scenarios

TimAllen_in_WildHogs

That doesn't make sense with what I said. Are you telling me robinhood stole all your money and declared bankruptcy? Cause that certainly hasn't happened. Idk what "I meant being a victim" means in this context. If a brokerage like robinhood is a member of SIPC, your funds are fully protected under a $250k in cash and $500k in assets. I have well under that so my assets are protected. Again, all my stocks/ETFs in robinhood are in my name, not robinhood's name. So if robinhood goes under, I can transfer those stocks/ETFs to my other brokerage.

RazDoStuff

"Congratulations to our client, Bullish, on their successful IPO transaction. By collaborating with Bullish and our Investment Bank (IB)/Equity Capital Market (ECM) partners at J.P. Morgan and Jefferies, the Webull ECM team was thrilled to support the transaction through our client’s participation in a meaningful way. Webull is committed to offering ECM access to our clients. Webull clients have participated in over 700 ECM offerings since 2019 and are on pace to participate on well over 200 transactions in 2025. We continually work to partner with new underwriters and provide access to as many ECM transactions to our clients as possible. The IPO market is evolving to accommodate the biggest change in equity market structure, the rise of retail trading. Partner with Webull to navigate your IPO journey." Webull Financial LLC, Member SIPC, FINRA. Invest $BULL to 50 EOY

TimAllen_in_WildHogs

lol nah. Robinhood is a member of SIPC, and my account is well under the amount they cover up to, so im protected there. Plus, my stocks and ETFs are held in my name and can be transferred to another brokerage if needed. > I'm here because it happened to me. I'm here to warn other people. Robinhood declared bancrupty and stole all your money?? Well, thats news to me!

reaper527

> Passed half a million invested congratulations! i'm still a couple years away from that. (if i hit the targets on my roadmap, i'll probably be there in summer 2029, but obviously that could come sooner or later than that depending on how things shake out). do you have any plans for changes based on SIPC's insurance program only covering up to 500k?

SirGlass

So according to this robinhood UK basically just clears through Robinhood USA so you have all the same basic protections of a USA brokerage [https://robinhood.com/gb/en/support/articles/robinhood-uk-faq/](https://robinhood.com/gb/en/support/articles/robinhood-uk-faq/) Meaning RH does not "own" your shares, if RH was to go bankrupt RH cannot sell your shares to pay its bills, its creditors cannot lay claim to your shares If RH went bankrupt your shares would just transfer to another brokerage or another brokerage would buy or take over running robinhood SIPC only kicks in if there are "Missing" shares , for example if RH did decide to take your shares, sell them to pay off their own bills (what is very illegal and very much against the law) then SIPC would step in to recover those missing shares However in most past cases when a brokerage fails or the company that runs the brokerage fails (bear) its pretty boring, another brokerage will step in and assume the brokerage business .

Apart-Wrangler367

The underlying shares held by VOO would still be there (I don’t know how an employee of Vanguard could embezzle those practically speaking) so they would just be transferred to another brokerage and you’d probably receive shares in that brokerage’s equivalent ETF. For example, State Streets equivalent of of VOO is SPY SIPC is more for when a firm is financially troubled and can’t give customers their money because of that, not really for fraud.

tinyraccoon

This might be a dumb question but please bear with me. If I buy 100% VOO and Vanguard (the company that operates VOO) somehow goes out of business, due to its own problems and not SPX going to 0 (say one of its employees stole all the money or whatever). Am I just SOL then, or will SIPC or a similar government entity help me out?

Winter-Employee4187

Horrible trying to close account. No live customer service. You talk to a bot all day. || || |Hi , thank you for contacting Member Support. I understand your frustration and want to help you close your account. You can withdraw your funds through the mobile app or website by selecting the menu icon ≡ and choosing "Withdraw." Once your funds are withdrawn to your connected bank account (typically takes 3-5 business days), you can then close your account through Account Settings. I'm transferring your case to a colleague who specializes in account closures to assist you further with this process. They'll review your request and help ensure everything is handled properly. Best, Sam from Member Support Sam **Open to the Public Investing, Inc., Member**  **FINRA/SIPC** Public © 2025 Investors First™️ [Public.com Terms of Service ](https://public.com/terms-of-service) ​[Public.com Disclosure Library](http://public.com/disclosures) ​[Public.com FAQs](https://help.public.com/en/) | that there reply.

m0n3ym4n

Any reputable firm will have SIPC protection which specifically protects against that. Your cousin’s buddy jumbo and Bernie madoff, not so much.

clonehunterz

SIPC coverage limit is $500,000 per account type per broker, with up to $250,000 in cash. So yes, you’ll want multiple accounts if you're worried about a broker going bankrupt, though no SIPC-backed investor has ever lost securities due to broker failure. However, major custodians (Fidelity, Schwab, Vanguard) carry private insurance (often via Lloyd's of London) that extends coverage into the hundreds of millions or even billions. The same rules as for "retail" will not count for you with a billion on your account. Very likely that you will have a coupel of conversations instead of "just looking for a broker to invest". Also, wealthy individuals with 1 billion are not investing only in stocks, diversification is not a myth. e.g. private banks, trust structures, estate, llc's, offshore structures and so on. multiple custodians and legal entities, ideally advised by a trust & estate attorney and tax planner. and a lot more of things that you will only face and experience when you actually have such a high amount of money.

dvdmovie1

Your broker is protected by SIPC. Personally, I'd recommend Fidelity.

greenpride32

I'm in the US so I'm not sure what are the best brokerages in Canada. But in terms of holding the stock directly, the only way to really do this is by holding shares via the transfer agent. In the US, ComputerShare is probably the largest player. Problem with ComputerShare is they charge a lot of fees and have limited options. As such most people prefer to use the brokerages. There are at least a few big transfer agents, so let's say you settled on 3 stocks, it's possible they could be 3 different agents, which means you 3 transfer agent accounts. I can tell you from US experience, transfer agent portals/apps are very big downgrades to the big name brokerages. It will feel like you're using tools from 20 years ago. In the US we have SIPC to protect/insure our holdings in brokerages. I'd imagine Canada has some equivalent. What's your concern about brokerage/bank holdings?

Necessary_Paradox

Here’s w quick rundown of pros and cons; Pros Passive income generation: You can earn a small amount of extra money on stocks you already own, simply by making them available for loan. Continued stock ownership: You retain ownership of your shares and can sell them at any time, even while they are on loan. No additional fees: Robinhood does not charge extra fees for participating in the program, meaning the income you earn is pure upside. Cash collateral: Robinhood provides cash collateral, at a minimum of 100% of the loan value, to a third-party bank to protect your loaned shares in case of default by the borrower or Robinhood itself, according to Robinhood. Cons Loss of voting rights: While your shares are on loan, you temporarily lose your voting rights on company matters. Dividend impact: If a lent stock pays a dividend, you may receive a "cash-in-lieu" payment instead of a qualified dividend, which can be taxed as ordinary income at a higher rate. However, Robinhood attempts to recall shares before dividend payments to avoid this issue in most cases. Minimal earnings: The income generated from stock lending is often small, especially for individual investors with average-sized portfolios. Default risk: Although rare and mitigated by collateral, there's a risk that the borrower or Robinhood Securities could default and fail to return your loaned shares. No SIPC protection: Loaned securities are not protected by the Securities Investor Protection Corporation (SIPC), according to Robinhood. Hope this helps.

mp0295

Technically there likely wouldn't be a bankruptcy trustee, but rather the b/d would go into SIPC recievership because, under the Securities Investor Protection Act, b/ds are encouraged to use a special b/d alternative to bankruptcy proceedings under the bankruptcy code.

greytoc

All brokers that provide accounts in the US are members of SIPC and regulated by the SEC and FINRA. Just to be clear - only accounts domiciled in the US are regulated by FINRA and protected by SIPC. If the account is not domiciled in the US - the account may not be managed by a US entity. As for Moomoo - like many brokers that have international subsidiaries - they have a US brokerage business. If you goal is to diversify into US listed ETFs which provide access to non-US assets such as in HK - any broker can do that. Taking advice from youtubers is not always a good idea. If you want to choose a broker - see the factors in how choose a broker in the wiki here - [https://www.reddit.com/r/investing/wiki/index/gettingstarted/#wiki\_how\_do\_i\_choose\_a\_broker\_to\_invest.3F](https://www.reddit.com/r/investing/wiki/index/gettingstarted/#wiki_how_do_i_choose_a_broker_to_invest.3F)

thor_barley

SIPC is not there to watch while you lose your nest egg. SIPC wants you confidently back in the market. That’s not charity. SIPC’s members want hands on your money. 100% recovery is the objective. Members pay in, but SIPC also litigates to recover. And with the backing of the industry if you got a big transfer out of a failed fund you might feel like you’re chased by a governmental agency staffed by big law attorneys. No guarantees above the pledged amount but that’s not the end of the story.

Qel_Hoth

That's what SIPC is for.

geniusboy91

If funds aren't there, and the stocks aren't there, and you're over the SIPC insured limit, and no other broker wants to buy up the obligations, you'd just become a bankruptcy creditor like everyone else. If the government arbitrarily decides the fallout would be too economically calamitous, they could step in above and beyond their obligation to do so.

Ok_Appointment_8166

When you deposit money in a bank account, it is the bank's money, on their books and liable to be paid out to other creditors in a bankruptcy before you. Hence the need to FDIC insurance. When you buy funds or stocks through a brokerage, it is still your money and the brokerage has no claim to it. If they go bankrupt it may make it complicated to track things, but they can't use your money to pay off any other claims. The value of the thing you bought through the brokerage may decrease so you can still lose money. There is SIPC insurance to cover fraud but not a legitimate loss of value in whatever stock or funds you own.

ChiAndrew

SIPC has so little it couldn’t bail out a ham sandwich

Phuffu

Fidelity’s private insurance far exceeds the SIPC limit. They have a page on their website. If Fidelity or Schwab or Vanguard failed, we’d be in a financial crisis worse than 2008. I wouldn’t worry too much about it.

vpoko

Assuming that Fidelity was properly keeping records and keeping your assets segregated from theirs, you would most likely get your shares back once the bankruptcy trustee worked through their dissolution. On the other hand if they mingled your assets with theirs and ended up losing them, or never actually bought the shares they were supposed to buy, etc., then your compensation would be limited to the SIPC coverage limits.

brrods

They have the same protections as any other company that handles investments SIPC

Nudes_Are_Food

Yeah this is what confuses me. Robinhood agrees to provide the asset to you when public, but what if they don’t? What’s your legal recourse? Are there any SIPC assurances or are you just shit out of luck?

bobdevnul

RH customer support can be atrocious. Otherwise RH is ok. RH's SIPC insurance should be as good as anywhere else. Understand what it is. It is not the same as FDIC. Opening an account at the other big discount brokers is the same level of difficulty as RH. Go online and open an account. For fractional shares Fidelity is best. I had RH for a couple of years as a small side account. I ran into a bad problem the last year getting my 1099 for taxes. Customer support was very bad at fixing that. I would not use RH again. I prefer traditional brokers.

solanawhale

That’s not how that works? When you buy stocks, you legally have equity in a company. You get certain rights and benefits. You own part of the company (to some degree). You can take your stock and transfer it to another broker if you want. With “stock tokens”, all you own is a digital token that mirrors the asset. You don’t get dividends, voting rights, or SIPC protection. You don’t legally own any equity in the company. The assets are not liquid. You can only sell them via Robinhood (because no sane person would take an IOU in exchange for real money).

discodropper

That situation is complex, but the TLDR is the SIPC is still ‘recovering’ money, and his Ponzi scheme wasn’t a brokerage firm. First, the SIPC is [still recovering funds](https://en.wikipedia.org/wiki/Recovery_of_funds_from_the_Madoff_investment_scandal) for people who lost money through that Ponzi scheme, but it’s difficult to verify claims on legitimate losses since none of the profits ever actually existed. Total liabilities are estimated at $64.8B, whereas SIPC has $1.7B in assets and $1B in credit. In other words, no way they can cover the losses in full. That said, SIPC initiated one of the two lawsuits that got the ball rolling on recovering funds, and as of March 2025 about $19B has been recovered. That’s far more than the $500,000 per account guaranteed by SIPC. Second, Madoff’s Ponzi scheme was run in parallel to [a legitimate trading arm](https://en.wikipedia.org/wiki/Madoff_investment_scandal) that acted as a major market maker. The fraudulent fund was set up as an LLC and handled through his personal accounts. (He borrowed money from the legitimate arm to cover his liquidity issues when the fraudulent one started unraveling.) In other words, although he was a legitimate broker-dealer and the head of a legitimate brokerage firm, for the Ponzi scheme he was acting as an asset manager. He wasn’t acting as a brokerage firm at all, he targeted people through word of mouth and his reputation on Wall Street, essentially guaranteeing returns.

8yba8sgq

Didn't SIPC screw over the Bernie Madoff clients?