by KYW's Salil Gutt
The sudden and dramatic collapse of Bear Stearns begged the following question for all investors. What will happen to my investments if my broker were to go broke ? No pun intended.
There is little need to worry .The Securities and Exchange Commission, the SEC, mandates brokerage firms to segregate client assets from the broker's own assets. So investors are protected even if their broker had significant losses when trading for their own accounts.
If a firm were to go bankrupt, then the Securities Investor Protection Corporation, SIPC, steps in. The SIPC will help investors transfer their assets to a healthy firm. If client assets still fall short, then the SIPC would cover losses up to $500,000.
This coverage is similar to the $100,000 FDIC insurance limit if a bank were to go under. Most firms have insurance coverage in excess of the SIPC limit. It would be a good idea to call your broker to find out the extent of that excess coverage.
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