What happens to your stocks if a brokerage company goes bankrupt?
What happens to your stocks/portfolio if a brokerage company goes bankrupt?
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It depends on where the brokerage office is located and under which laws it operates.
Lehman Brothers went bankrupt recently. And a lot of client trading accounts were frozen for a couple of years under British law in some Lehman brokerage offices.
It’s best to stay away from any brokerage that is in danger of going bankrupt. Because financial managers tend to do strange and unethical things with other people’s money, when they are in danger of loosing their own money.
SIPC insurance should cover your account, but not your trading loses. If your positions lose value you lose money like always. But if the company goes bankrupt you should be able to get your equity out if it’s a US brokerage covered by SIPC. I don’t think SIPC is backed by the government, but they’re bailing out anybody who needs it and their dog nowadays.
The regulators will arrange for another broker to take over the retail business. Customer assets are segregated from company assets and can’t be attached by creditors.
As far as I know… the brokerage company sould be SIPC it’s another version of FDIC, but more money.
Markets are designed to allow individuals to look after their private needs and to pursue profit.