Comments on: How The SIPC Protects Investors From Broker Bankruptcy http://investingtoolkit.com/sipc-protects-investors-broker-bankruptcy/ Discount Brokers, Stock Investor Tools and Investment Resources Galore Wed, 10 Mar 2010 19:58:16 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Joe http://investingtoolkit.com/sipc-protects-investors-broker-bankruptcy/comment-page-1/#comment-55 Joe Tue, 02 Feb 2010 21:25:00 +0000 http://investingtoolkit.com/?p=196#comment-55 I currently have my holdings in eTrade and I'm afraid they're going belly-up. How does someone hedge against a brokerage in bankruptcy during a time when I need to execute a trade? I currently have my holdings in eTrade and I’m afraid they’re going belly-up. How does someone hedge against a brokerage in bankruptcy during a time when I need to execute a trade?

]]> By: Francis Investor http://investingtoolkit.com/sipc-protects-investors-broker-bankruptcy/comment-page-1/#comment-8 Francis Investor Sun, 09 Aug 2009 15:04:03 +0000 http://investingtoolkit.com/?p=196#comment-8 Richard, You make a very good point about the Madoff case. But I can see how that type of fraud may not cover victims. The Madoff scandal is caused by a deliberate scam perpetrated by a financial company that in my mind, doesn't really qualify as a legitimate company in the first place. So is the SIPC supposed to cover victims of such outright scams based on a formula? In my mind, I expected the SIPC to be there for customers of legitimate companies which have failed or gone bankrupt through ordinary, licit means. When this happens and there are some missing assets, then my expectation is that the SIPC would then get involved. I didn't realize they were expected to step in when a full blown scam involving a sham financial company is exposed. Richard,
You make a very good point about the Madoff case. But I can see how that type of fraud may not cover victims. The Madoff scandal is caused by a deliberate scam perpetrated by a financial company that in my mind, doesn’t really qualify as a legitimate company in the first place. So is the SIPC supposed to cover victims of such outright scams based on a formula?

In my mind, I expected the SIPC to be there for customers of legitimate companies which have failed or gone bankrupt through ordinary, licit means. When this happens and there are some missing assets, then my expectation is that the SIPC would then get involved. I didn’t realize they were expected to step in when a full blown scam involving a sham financial company is exposed.

]]> By: Richard Friedman http://investingtoolkit.com/sipc-protects-investors-broker-bankruptcy/comment-page-1/#comment-7 Richard Friedman Sun, 09 Aug 2009 12:17:37 +0000 http://investingtoolkit.com/?p=196#comment-7 Many people are now aware, because of the Madoff case, that SIPC only protects people when they want to, and therefore cannot be relied upon as a form of "insurance" should their brokerage company fail. SIPC has gone so far now not to pay Madoff investors that they have illegally opted to ignore their own statutes from 1970, for the first time, and not pay Madoff investors using the method of calulation they have always used, even in previous Ponzi cases. Investors can no longer rely on SIPC. Therefore, investment decisions (in particular, who you choose to invest with) should be made on the basis of SIPC not existing, for in the case of thousands of Madoff investors who will receive not even a dime, they don't exist. Don't let what happened to them happen to you. Many people are now aware, because of the Madoff case, that SIPC only protects people when they want to, and therefore cannot be relied upon as a form of “insurance” should their brokerage company fail. SIPC has gone so far now not to pay Madoff investors that they have illegally opted to ignore their own statutes from 1970, for the first time, and not pay Madoff investors using the method of calulation they have always used, even in previous Ponzi cases. Investors can no longer rely on SIPC. Therefore, investment decisions (in particular, who you choose to invest with) should be made on the basis of SIPC not existing, for in the case of thousands of Madoff investors who will receive not even a dime, they don’t exist. Don’t let what happened to them happen to you.

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