Given the current market conditions and the messages consumers are hearing about the economy, we understand that you may have questions about federal programs such as the Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC). It is important to understand that FDIC insurance and SIPC coverage protect customers against the risk of failing financial institutions. They do not protect consumers against market losses.
FDIC insurance covers deposits in FDIC-insured federal banking institutions, generally banks and savings associations. Up until October 3, 2008 coverage was limited to up to $100,000 per depositor for non-qualified accounts in the institution and $250,000 per depositor in qualified accounts in the institution. On October 3, 2008, the FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor in qualified or non-qualified accounts. This temporary increase is effective immediately, and lasts through December 31, 2013. On January 1, 2014, the coverage per depositor will return to $100,00 except for IRAs and other certain retirement accounts.
SIPC coverage is provided to customers that hold cash and securities such as stocks, bonds and mutual funds at a brokerage firm. It covers the replacement of missing stocks and other securities up to $500,000, including $100,000 in cash claims. Generally SIPC covers up to $500,000 per individual per brokerage firm. So if you have $500,000 in assets at a brokerage firm, and the brokerage firm fails, SIPC coverage will insure up to $500,000 including up to a maximum of $100,000 in cash. It does not cover losses due to a decline in value of securities or cash.
Additional Insurance
Coverage:
Above and beyond SIPC coverage, our
clearing firm partner First Clearing,
LLC* maintains additional coverage
through Lloyds of London Underwriters
for accounts held at First Clearing.
For clients who have received the
full SIPC payout limit, First Clearing’s
policy with Lloyds provides additional
coverage above the SIPC limits for any
missing securities or cash in client
brokerage accounts up to a firm
aggregate limit of $1 billion (including
up to $1.9 million for cash per client).
In other words, the aggregate
amount of all client losses covered
under the policy are subject to a limit
of $1 billion with each client covered
up to $1.9 million for cash.
Please note that coverage
provided by SIPC and Lloyds does not
protect against loss of market value of
securities.
*First Clearing, LLC, a non-bank affiliate of Wells Fargo & Company,
produces account statements and trade confirms, and provides our
firm with recordkeeping, operational, clearing and custodial
services. First Clearing
is a member of FINRA, SIPC, NYSE, NASDAQ and other regional stock
exchanges.