<BreadWithSpam[at]fractious.net> wrote in message
news:yob64z766ia.fsf[at]panix3.panix.com...
- quote -

One needs to be a little careful here. Speaking colloquially
(non-legalese), the investor is the "real" owner, as described in the first
SEC cite you give below. But "legal owner" is a term of art, meaning who
has legal title, and that is the broker (actually, the custodian of the
shares is the legal owner).

You have "beneficial" ownership of the securities (also a term of art).

See http://www.georgesonshareholder.com/pdf/secproxy.pdf, which goes into
the rights incident to each form of ownership. Before digging this up, I
did not realize just how intricate were the lines of ownership and voting
rights.

See also:
http://dictionary.lp.findlaw.com/scr...f5f389cd3fba2e
(for definitions of legal owner, beneficial owner, equitable owner)

- quote -

Mark Freeland
nBeOwXs[at]pacbell.net

"Bucky" <uw_badgers[at]email.com> writes:

- quote -

Not necessarily. The vast majority of holdings in brokerages
are held "in street name". While you still legally own the
assets, they are registered in the *broker's* name.

See <http://www.sec.gov/investor/pubs/holdsec.htm> (last question)
<http://www.sec.gov/answers/street.htmand <http://www.fool.com/News/mft/2005/mft05031407.htm
- quote -

In fact, the SIPC is *not* protecting money market funds.
SIPC protects your *ownership* of stuff - not the value
of the stuff you own. If a money market fund breaks the
buck, you lose money and SIPC has nothing to do with it.

See <http://www.sipc.org/how/covers.cfm
- quote -

SIPC is the first line of defense in the event a brokerage firm
fails owing customers cash and securities that are missing from
customer accounts.
<snipWhen a brokerage is closed due to bankruptcy or other financial
difficulties and customer assets are missing, SIPC steps in as
quickly as possible and, within certain limits, works to return
customer's cash, stock and other securities.

--
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No HTML in E-Mail! -- http://www.expita.com/nomime.html
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Bucky wrote:
- quote -

I did some research at http://www.sipc.org/how/brochure.cfm

The main protection for SIPC is when you are missing cash or securities
after a brokerage fails. Theoretically, you should still own all of
your stocks and bonds after a brokerage fails, but in the case of a
failed brokerage, there may have been poor accounting or a scandal. If
they don't return all your investments to you, then that's where SIPC
steps in.

I don't think large brokerages failing are out of the question. It's
not like the U.S. Treasury failing that we would be worried about food
and shelter. There's always the possibility for a huge scandal to
happen.

Thanks for all the great responces and links, looks like I should feel
safe to put all my eggs in one basket!

dan.gosser[at]gmail.com wrote:
- quote -

I've always wondered the same thing, why brokerages needed SIPC
insurance.

I understand why banks needs FDIC, because they take your money and
invest it elsewhere, like loans. So it is possible for them to lose
their investment (your money), go bankrupt, and not be able to give
your money back.

However, with a brokerage, the money you invest in stocks and bonds is
actually invested in stocks and bonds. Mutual funds are also actually
invested in stocks and bonds. They don't just pretend to be buying
stocks and bonds for you, but actually investing it elsewhere, right?
So if the brokerage goes bankrupt, you would still own all your stocks
and bonds.

I guess if you had money market funds with the brokerage, those could
go bankrupt. So is this what SIPC is protecting, just the money market
funds?

dan.gosser[at]gmail.com wrote:
- quote -

Since most of my money and my parents' money is with Fidelity, I
emailed them and received the following reply. I think the bottom line
is that accounts are insured up to $100 million in case Fidelity goes
bust.

"Fidelity mutual funds and their assets are legally separate entities
from Fidelity (FMR Corp.) and are administered by trustees who contract
certain services from Fidelity, such as portfolio management.
Therefore, if Fidelity were to experience financial difficulty, there
would be no risk of loss to our mutual funds, nor would the funds be
subject to any claims made against the Fidelity corporation.

Unlike some bank deposits, mutual fund shares are not insured by the
FDIC or other deposit insurers.

However, as required for all mutual funds, all investors' money is held
by a third-party custodian and not by the mutual fund company. So, even
if the fund company experiences financial problems, it can't use the
shareholders' money. The money in a mutual fund can be used only for
making investments of the type described in the fund's prospectus.
Fidelity has very sophisticated surveillance techniques that ensure
fund managers and traders are in compliance with the investment
parameters detailed in the fund's prospectus.

We do not offer any mutual funds that are insured against market loss.
However, we offer several funds that invest in bonds that are insured
against default. We also offer funds that invest solely in government
debt securities, which are considered to be the most credit worthy of
all debt instruments because they are backed by the full faith and
credit of the United States government

Mutual funds are required by the Investment Company Act of 1940 to
maintain a bond that covers the fund in case of misconduct by its
officers or employees. Also, each fund is audited annually by an
independent accounting firm, which insures the books are kept in order.

All brokerage accounts at Fidelity Brokerage Services LLC are carried
by National Financial Services LLC, a separately registered
broker/dealer and a Fidelity Investments company. In the unlikely event
of the financial failure of either Fidelity brokerage company, each
customer's brokerage account is protected up to $100 million. The
Securities Investor Protection Corporation (SIPC) protects customer
accounts up to $500,000, with a limit of $100,000 for cash balances.
Fidelity has purchased $99.5 million of supplemental coverage for
accounts that exceed $500,000. Of course, this coverage doesn't protect
against a decline in the market value of securities."

dan.gosser[at]gmail.com wrote:
- quote -

Your assets may not be at risk, but your accessibility to them may
suffer.

--
Ron

dan.gosser[at]gmail.com wrote:
- quote -

Btw you can see account balances in some non-Fidelity accounts (in my
case, a Merrill Lynch 401(k)) through the Fidelity web site.

- quote -

I think there is little risk, but I suggest reading about the
Securities Investor Protection Corporation (SIPC) at
http://www.sipc.org/how/brochure.cfm . The Fidelity site
http://www.ria.fidelity.com/ti_clearing.html says

"Securities in accounts carried by National Financial Services LLC
("NFS"), a Fidelity Investments company, are protected by the
"Securities Investor Protection Corporation ("SIPC") up to $500,000
(including cash claims limited to $100,000). For details, please see
www.sipc.org. NFS has arranged for additional insurance protection for
cash and securities to supplement its SIPC coverage. This additional
protection covers total account net equity in excess of the
$500,000/$100,000 coverage provided by SIPC. Neither coverage protects
against a decline in the market value of securities."

Brokerages are required to periodically clients with a "Statement of
Financial Condition", for which there is a link at
http://www.fidelity.com . Maybe someone here can suggest how such a
statement should be scrutinized.

Mutual fund assets are not held by the fund management company (FMC)
but by a custodian bank, so financial problems at the FMC ought not to
cause losses for fund investors.

Money market funds are heavily regulated are supposed to be managed not
to "break the buck" (have the NAV decline below $1.00), but there is no
absolute guarantee. A deep-pocketed brokerage firm might choose to bail
out a money market fund to avoid embarrassment. You can read about this
fairly remote risk by Googling 'money market fund "break the buck"'. To
reduce risk you could invest in a money market fund that invests only
in Treasury Bills.

I think 401(k) accounts are regulated separately from ordinary
brokerage accounts.

In article <1112170269.318831.38350[at]z14g2000cwz.googlegroups.com> ,
"dan.gosser[at]gmail.com" <dan.gosser[at]gmail.com> wrote:

- quote -

That sounds like a great question to ask your broker. As it
turns out, most items in most accounts are going to be insured,
up to some pre-set limit. But keep in mind that if a huge
company like Fidelity or Vanguard were to go broke, we would
probably have some far worse problems to worry about, like
the break down of society.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Simply put, I'd like to keep my 401k (mandatory), IRA, and an
additional taxable account with Fidelity. I like the ease of having
everything in one place, I don't want to get to retirement and have
dozens of accounts all over, forgetting what's what.

If a brokerage goes bankrupt, do you still own your stocks/bonds/etc?
Is there any risk there?

Thanks!