E-TRADE AND STOCKS and E-TRADE failure?

Question

I use E-trade to buy and sell stocks, but I do NOT own E-trade stock. If, by chance, E-trade fails, what happens to the stocks I own through them that they hold for (e.g., Coca-Cola, P& G, etc)?

Do I need to protect myself in someway now?

Answer 1

Securities Investor Protection Corporation (SIPC)

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.

Answer 2

In the event that ETrade fails, the SIPC your total equity balanced will be protected up to $500,000, which will include up to $100,000 in cash.  Some brokerage firms offer "excess SIPC" protection from third party companies.  I don't know if ETrade offers this.  I have an account at Firstrade.  They offer unlimted account protection through CAPCO.

Answer 3

E-Trade failing would be a huge surprise. They are not in mortgages, and as such do not hold or sell sub-prime loans. That's where the bulk of the bleeding is coming from.

Answer 4

All registered broker/dealers are required by law to have insurance protection through the Securities Investors Protection Corporation (SIPC) which insures each customers account securities up to $500,000 in market value and cash balances held up to $100,000

Most reputable firms also have additonal insurance through large insurance carries for their clients protection/

In reality when a broker/dealer fails, the exchange in which it is a member, or the firm's clearing agent will try to find a buyer for the firm.  The buyer will not buy the physical facilities or any part there of, but will take the customers so they can continue un-interrupted.

Most firm that recently file for bankrupcy, the balances and positions of their customers were not in any jepordy

If the firm is not taken over by anothe broker/dealer, a receivor is appointed by SIPC and they will immediately reconcile security positions and identify each and every customers' securities.

Been there done that as a regulator