Words of Wisdom from Mickie Siebert

While researching my 12/17/07 column, which will focus on how brokers protect your assets, I was sent the November issue of Mickie Siebert’s “Dollars and Sense” newsletter, which was mailed to all Siebert’s customers with their November statements.  She has a lot of experience dealing with the safety of the public’s money.  I cannot reproduce the entire newsletter, nor do I have room to quote her extensively in the upcoming column, but I thought the following was of great interest and is well worth reading. 

Account Protection

You can take comfort in knowing that, when you do business with Siebert, your account receives the highest level of coverage available in the brokerage industry - to the total net equity - with no limit for the amount of cash or securities.  And, unlike many other brokers, there is no “cap” on the aggregate amount of coverage for all of our customers’ assets.  Let me explain how this works.

There are different kinds of account protection that brokerage firms provide their clients to protect your account against insolvency of the brokerage or its clearing firm.  (There is no account coverage that will protect you against fluctuations in the market value of securities.)

All securities brokerage accounts, including your Siebert account, receive coverage from the Securities Investment Protection Corp. (SIPC) as primary protection for up to $500,000, including a limitation of $100,000 for cash.  SIPC coverage is required of all registered broker-dealers.  Since most “cash equivalent” money market mutual funds are considered securities under SIPC, investments in money market mutual funds held in a brokerage account are protected by SIPC along with your other securities to a maximum of $500,000.  You may visit http://www.sipc.org to learn more about SIPC protection.

Brokerage firms also have the option of providing “excess-SIPC” account protection for assets above these SIPC limitations through policies secured from private underwriters. 

Muriel Siebert clears on a fully disclosed basis through - and domiciles your accounts at - National Financial Services LLC (NFS), a Fidelity Investments company. We are the “introducing broker” and NFS is the clearing firm, which means that they clear youre trades and execute certain other activities.  You see their name along with ours on your monthly statements and confirmations.

NFS has arranged for additional protection for cash and covered securities to supplement its SIPC coverage.  This additional protection is provided under a surety bond issued by the Customer Asset Protection Company (CAPCO), a licensed Vermont insurer with an A+ financial strength rating from Standard and Poor’s.  NFS’ excess-SIPC protection covers total account net equity for all cash and securities in excess of the amounts covered by SIPC, for accounts of broker-dealers, like Siebert and Fidelity Brokerage Services LLC, which clear through NFS.  You may access a CAPCO brochure about “Total Net Equity Protection” at http://www.siebertnet.com/html/convenience___security.html.

NFS has stated to us that “there is no specific dollar limit to the protection that the CAPCO bond provides for any single customer account, nor is there an aggregate dollar limit applied to the total combined customer accounts of any one correspondent broker that clears through NFS.”

Many other brokerage firms do not provide the level of total net equity account protection you receive.  Many have excess-SIPC policies that are subject to aggregate limits on the total amount of customer assets that are covered, limits that are a fraction of total customer assets in their custody. 


Before you open a brokerage account, or deposit additional assets that would take you over the basic SIPC coverage levels, be sure you are familiar—and comfortable—with the assurances that your broker is protecting your money. 

Posted by on 12/10 at 10:30 AM






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