Recently, many investors may be wondering what would happen if their brokerage firm ever closed.
This is due to recent problems affecting the financial services industry.
When a brokerage firm ceases to operate, customer assets are normally transferred to another registered brokerage firm.
Also, customer assets are safe due to a number of rules which protect and safeguard investor assets.
A couple of these safeguards include the brokerage firm being required to meet minimum net capital requirements to reduce the likelihood of insolvency.
Furthermore, firms are required to be members of the Securities Investor Protection Corp (SIPC).
The SIPC insures customer securities accounts up to $500,000.
Brokerage firms are required to follow certain rules to help minimize the chances of financial failure and to protect customer assets.
For example, brokerage firms are required to maintain certain levels of their own liquid assets under the "Net Capital Rule". The "Customer Protection Rule" further requires brokerage firms to keep customer assets separate from their own accounts.
If your brokerage firm is in financial trouble, contact the firm to see what procedures you need to follow.
Furthermore, you can contact your financial advisor or visit the firm's Web site for updates and additional information.
Additionally, you can contact FINRA at (301) 590-6500 or send an email to the SEC at help@sec.gov to request further information.
The recent crisis affecting many financial institutions has the Federal Trade Commission warning investors to be on the look out for emails and phone calls trying to take advantage of the recent events.
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