If you have stocks with an online broker,and they go broke,what happens to your stocks?

Question

If you have stocks with an online broker,and they go broke,what happens to your stocks?

Answer 1

You go through a different broker thats all You still own the stocks that is provided they actually bought the stocks they said in the first place.

Answer 2

The only exception is stocks that are in a margin account.

Margin accounts do not have the same protections.

Those stocks in a margin account you have put up as collateral for money you have borrowed from the brokerage to buy more stock.

So those can get involved in the bankruptcy of a brokerage since they are collateral of the broker.

Answer 3

In the event that an online broker fails, the SIPC (Securities Investor Protection Corporation) acts to organize the distribution of customer cash and securities to investors.  If the customer's cash and/or securities are unavailable, the SIPC provides insurance coverage up to $500,000 of the customer's net equity balance including up to $100,000 in cash.  Some online brokers provide "Excess SIPC" coverage.  I currently use Firstrade.  They provide unlimited account protection.  Their "Excess SIPC" coverage is provided by the Customer Asset Protection Company (CAPCO), a licensed New York insurer.

Answer 4

Good Question, you are protected , just like banks have FDIC brokerage accounts have SDIC!

Your stocks can be transferred to another broker, ever if your brokerage firm goes broke, as long as the did buy the stocks when they said they did and didn't lie to you and just keep your money and buy nothing! That would be fraud.

Answer 5

You own the stocks, they only execute the trades. So, nothing happens, you'll just need to find someone else to handle the sale of your stocks purchased through them.