Asset Protection and Account Insurance
How Your Assets are Protected at Scottrade
The Securities Investor Protection Corporation (SIPC), a non-profit organization, was created in 1970 to protect investors and their holdings in the event their brokerage firm fails or declares bankruptcy. For more information, please visit www.sipc.org.
What is covered?
Securities, such as stocks and bonds, along with cash held by a customer at a failing brokerage firm are covered under SIPC coverage. Ineligible investments include commodities (unless defined as customer property under the Securities Investor Protection Act), currency, fixed annuity contracts and investment contracts that are not registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933. For more information, please visit www.sipc.org.
How does SIPC protect me?
According to the SEC’s Customer Protection Rule, client assets are required to be separate from the brokerage firm’s assets. Client assets are defined as any stocks or bonds that are fully paid for or securities purchased with excess margin. In the unlikely event that a brokerage firm should fail while holding these assets, which are registered in the client’s name, they are distributed back to the client. Remaining assets or customer property such as cash are distributed back to clients on a pro rata basis.
When involved, the SIPC will typically ask a federal court to appoint a trustee to liquidate the failing brokerage firm and protect its clients. If the brokerage firm does not have sufficient capital to satisfy client claims, the reserve funds of the SIPC are used to supplement the firm. SIPC coverage constitutes a maximum of $250,000 in cash claims* and $250,000 in securities claims totaling $500,000 per client.
Scottrade purchased additional protection (supplemental SIPC coverage) from insurers XL in London in the amount of $24.5 million (inclusive of $900,000 in cash claims). This insurance would only be used if a claim exceeded what SIPC covered and is subject to an aggregate limit of $100,000,000 at Scottrade.
The Federal Deposit Insurance Corporation (FDIC)**, an independent agency of the federal government, was created in 1933 to insure deposits in banks and thrift institutions for at least $250,000. For more information, please visit www.fdic.gov.
What is covered?
Deposit accounts at Scottrade Bank and bank sweep assets participating in the Bank Deposit Program at Scottrade, Inc. are covered under FDIC insurance. Money invested in stocks, bonds, mutual funds, municipal securities or life insurance policies are not covered under FDIC insurance. For more information, please visit www.fdic.gov.
How does FDIC protect me?
FDIC insurance varies based on account type and is determined by the “ownership” of the account.
|Account Type||Amount per Owner|
|Individual Accounts||$250,000 per owner|
|Joint Accounts||$250,000 per co-owner|
|IRAs||$250,000 per owner|
|Trust Accounts||$250,000 per owner
Beneficiary subject to specific limitations and requirements
*In order for cash to be covered by SIPC or supplemental SIPC, cash held in an account must be for the purpose of, or as a result of, securities transactions. Cash held in a securities account for the purpose of earning interest, which was not the result of a securities transaction, may not be covered by SIPC or supplemental SIPC.
**FDIC coverage does not apply to the following account types: Corporate; Partnership/Limited Partnership; Qualified Plan (401k/Pension/Profit Sharing/Keogh); Investment Club; Limited Liability Company; Asian Pacific; At Risk Accounts; Accounts with mail proceeds and interest; accounts with short positions; and Pattern Day Trader accounts.