Can Municipal bonds be changed from my brokers street name book entry to my name in case they go under?

Question

With concerns of my brokerage firm going under can I register my muni bonds I have with them in my own name so if they go under it does not affect me?

Answer 1

The value of your bonds will not be affected if the dealer goes under.  The only way your account can be hurt is if the dealer commits actual fraud.  But if they go bankrupt, it does not mean you go bankrupt with them.

Answer 2

Many municipal bonds can only be held in what is called "book entry" form.  There is no street name nor customer name. There bonds are held usually at the bond's trustees office and can not be registered.

Bonds held by trustees are isolated in the event the brokerage firm does file bankrupcy, and you will be asked where what other broker or bank do you want the bond delivered- they will not and can not register the bond to you.

One of the dumbest thing any holder of muni bonds can do is have them registered in their name.   Most bonds can not be registered, and if you get them registered, when you sell them, registered bonds bring a lower price..  When you sell them you must deliver them to the brokerage firm, AND possibly provide a legal opinion which you will have to obtain from the trustee before you receive the proceeds of the sale.

If you don' t trust the brokerage firm you are dealing with, you should move your account to another brokerage firm.  If you don't trust any brokerage firm, then you should liquidate your account and deal with none of them.

Answer 3

I would be more concerned about what muni-bonds I was holding than who was holding them.

I don't see any point to change bonds from street name and order out the securities. If you are with a public firm who you don't feel comfortable with move your account to a bigger firm.

What is the name of your broker dealer?

Remember that the SIPC protects customer assets at a broker-dealer if the broker dealer is insolvent. Note: They do not guarantee the value of what you invested in.

http://www.sipc.org/how/sipcprotects.cfm

http://www.sipc.org/pdf/SIPC_English_200...

"If your brokerage firm goes out of business and is a member of the Securities Investor Protection Corporation (SIPC), then your cash and securities held by the brokerage firm may be protected up to $500,000, including a $100,000 limit for cash. Some firms obtain private insurance policies to provide protection beyond SIPC limits. When a SIPC member becomes insolvent, SIPC will ask a court to appoint a trustee to supervise the firm's liquidation and to process investors' claims.

SIPC covers most types of securities, such as stocks, bonds, and mutual funds. But SIPC does not protect you against losses caused by a decline in the market value of your securities. And it does not provide protection for investment contracts not registered with the SEC. "

http://www.sec.gov/answers/sipc.htm