How does SIPC protection work?
How does excess SIPC work?
I am an investor with an account value at Ziegler that is higher than $500,000. What should I do?
If my assets are not an asset type that is protected by SIPC, do I have any excess SIPC account protection?
Is there anyone who is excluded from SIPC protection?
What does SIPC cover and how does it differ from Federal Deposit Insurance Corporation (FDIC) insurance?
If I have one account with one SIPC member and one account with another (separate) SIPC member, how are those accounts covered?
If I have more than one brokerage account with Ziegler, is each account protected through SIPC?
How long does it typically take to receive securities and cash from SIPC if the account protection is instituted?
Is it safer to hold my own certificates?
Can any securities firm be a member of SIPC?
Who examines the operational and financial conditions of SIPC members?
What is the FDIC?
What is the purpose of FDIC deposit insurance?
What is the FDIC insurance amount?
Whose deposits does the FDIC insure?
Does FDIC insurance protect creditors and shareholders?
What does FDIC insure?
What is not insured by the FDIC?
What types of financial institutions are insured by the FDIC?
Can insurance coverage be increased by depositing funds with different insured banks?
Can insurance coverage be increased by dividing my deposits into several different accounts at the same insured bank?
insurance coverage be increased by using a different co-owner's Social
Security number on each account or changing the way the owners' names
are listed on the accounts?
Can insurance coverage be increased by dividing my funds and depositing them into several different accounts?
What happens when banks merge?
What happens when a bank fails?
a bank fails, what is the timeframe for payout of the funds that are
insured if the bank cannot be acquired by another financial institution?
What happens to customers with uninsured deposits?
Q. How does SIPC protection work?
You can have confidence that given the very high percentage of client
assets that are recovered during liquidation, SIPC protection is
adequate for nearly all client accounts.
Consider the following:
securities laws require that client assets be segregated from a firm’s
own assets. The law is backed by internal and external audits,
regulatory examinations and weekly and monthly reporting requirements.
client assets are held in book-entry form at industry depositories and
are not in physical possession by the firms themselves.
funds are used to make investors whole after all client assets held at
the securities firm have been recovered. SIPC provides $500,000 of net
equity protection, including $100,000 for claims for cash awaiting
reinvestment, but that does not necessarily mean that the account will
receive only up to $500,000. Rather, in a SIPC proceeding, the account
will receive a pro-rata share of all client assets recovered in
liquidation and then will receive up to $500,000 from SIPC to make up
any difference that may still exist. To illustrate a SIPC liquidation,
assume that a securities firm fails, resulting in $5 billion of client
claims on assets, with a recovery rate of assets in liquidation of 90%
or $4.5 billion, and assume a client account value of $5 million:
return to list
Q. How does excess SIPC work?
After the SIPC limit ($500,000 of net equity protection, including
$100,000 for claims for cash awaiting reinvestment) is exceeded, Excess
SIPC covers the remaining net equity of securities positions and cash
in your account.
Pershing'sexcess insurance policy purchased
through Lloyd’s of London provides the following excess account
protection for assets held in custody with Pershing and its
London-based affiliate, Pershing Securities Limited:
excess account protection offers the highest level of coverage
available in the industry today. Excess account protection claims would
only arise where Pershing failed financially and eligible client assets
or covered accounts, as defined by SIPC and Lloyd’s of London, cannot
be located due to theft, misplacement, destruction, burglary, robbery,
embezzlement, abstraction, failure to obtain or maintain possession or
control of Ziegler clients’ securities or to maintain the special
reserve bank account required by applicable rules (SEC 15c-3).
For more information about Lloyd’s of London, please visit their Web site at www.lloyds.com.
Q. I am an investor with an account value at Ziegler that is higher than $500,000. What should I do?
Knowing that your assets are held by our clearing firm, Pershing, be
assured that your assets are safe and protected. Pershing, an affiliate
of The Bank of New York Mellon Corporation, is a leading global
provider of clearing and financial services outsourcing solutions to
more than 1,100 institutional and retail financial organizations,
registered investment advisors, and managed account programs.
insurance policy purchased through Lloyd’s of London provides the
following excess account protection for assets held in custody with
Pershing and its London-based affiliate, Pershing Securities Limited:
Q. If my assets are not an asset type that is protected by SIPC, do I have any excess SIPC account protection?
A. No, your assets must first be protected by SIPC in order to be eligible for excess SIPC protection.
Q. Is there anyone who is excluded from SIPC protection?
Most investors are eligible for SIPC assistance. However, SIPC’s funds
may not be used to pay claims of any failed securities firm for
investors who are:
Q. What does SIPC cover and how does it differ from Federal Deposit Insurance Corporation (FDIC) insurance?
SIPC replaces missing stocks and other securities in cases in which it
is possible to do so — even when the investments have increased in
value. SIPC protects the cash and securities, such as stocks and bonds,
held at a financially troubled securities firm. SIPC covers retail
brokerage investors, as well as institutional investors.
does not cover individuals who are sold worthless stocks and other
securities. Among the investments that are ineligible for SIPC
protection are commodity futures contracts and precious metals, as well
as investment contracts (such as limited partnerships) and fixed
annuity contracts that are not registered with the SEC under the
Securities Act of 1933.
It is also important to understand that
SIPC protection is not the same as FDIC protection. SIPC does not offer
to investors the same blanket protection that the FDIC provides to bank
depositors. The FDIC protects deposits, currentlyup to $250,000 in
most, but not all, U.S. banks and savings associations in the event
that the institution becomes insolvent. For further information about
FDIC insurance, see www.fdic.org. The FDIC does not cover securities,
mutual funds, or similar types of investments, and money that is
invested in an FDIC-insured product is not covered by SIPC.
If I have one account with one SIPC member and one account with another
(separate) SIPC member, how are those accounts covered?
A. The accounts are treated as separate accounts. The $500,000 in protection applies to each account.
Q. If I have more than one brokerage account with Ziegler, is each account protected through SIPC?
Yes, if you hold the accounts in separate, legal capacities. In other
words, if you hold one account in your own capacity and maintain other
accounts as a trustee for another person under certain trust
arrangements, you would be deemed a different client in each capacity.
client who has several different accounts must be acting in a
good-faith separate capacity with respect to each account. For
instance, an investor might have one account in his or her name and
maintain a joint account with his or her spouse. All such accounts,
however, must meet the requirements of SIPC rules identifying accounts
of “separate” clients of your financial organization. Copies of these
rules may be obtained at www.sipc.org or by writing to SIPC and
requesting the “Series 100 Rules.” As another example, an investor who
in a single capacity has several different accounts with his or her
financial organization, such as cash and margin accounts, would be
considered a single client for the purposes of applying the SIPC
account protection limits.
Q. How long does it typically take to receive securities and cash from SIPC if the account protection is instituted?
Most clients can expect to receive their property in one to three
months. If the firm’s records are inaccurate, or if the firm was
involved in fraudulent activity, it may take longer.
Q. Is it safer to hold my own certificates?
No, certificates you hold can be misplaced, stolen, or accidentally
destroyed. In addition, when you hold your own securities, you are
responsible for collecting interest and dividend payments and
monitoring events, such as bond calls and tender offers. Missing such
events can cost you money.
Q. Can any securities firm be a member of SIPC?
All SIPC members must be registered with the SEC. If a member loses its
SEC registration, its SIPC membership is automatically terminated.
of FINRA, (the Financial Industry Regulatory Authority) are required to
obtain SIPC coverage. Ziegler is a member of both FINRA and SIPC.
Q. Who examines the operational and financial conditions of SIPC members?
The SEC, Financial Industry Regulatory Authority (FINRA), and state
regulators are the “examining authorities” for SIPC members. SIPC
itself has no authority to examine or inspect member firms.
Q. What is the FDIC?
The FDIC — short for the Federal Deposit Insurance Corporation - is an
independent agency of the United States government. The FDIC was
created by Congress in 1933 to make the savings of millions of
Americans secure. The FDIC protects depositors against the loss of
their insured deposits if an FDIC-insured bank or savings association
fails. FDIC insurance is backed by the full faith and credit of the
United States government.
Q. What is the Purpose of FDIC deposit insurance?
The FDIC protects depositors' funds in the unlikely event of the
financial failure of their bank or savings institution. FDIC deposit
insurance covers the balance of each depositor's account,
dollar-for-dollar, up to the insurance limit, including principal and
any accrued interest through the date of the insured bank's closing.
Q. What is the FDIC insurance amount?
On October 3, 2008, Congress temporarily increased FDIC deposit
insurance from $100,000 to $250,000 per depositor. This includes principal and accrued
interest up to a total of $250,000. For example: Jane Smith has a CD in
her name alone with an original balance of $248,000. Jane has interest
earned of $ 3,000. Jane's account now totals $251,000. But, Jane is
only insured up to $250,000 and $1,000 is uninsured.
Q. Whose deposits does the FDIC insure?
Any person or entity can have FDIC insurance on a deposit. A depositor
does not have to be a citizen, or even a resident of the United States.
Q. Does FDIC insurance protect creditors and shareholders?
A. FDIC insurance only protects depositors, although some depositors may also be creditors or shareholders of an insured bank.
Q. What does FDIC insure?
FDIC insures all types of deposits received by a financial institution
in its usual course of business. For example, savings and checking
accounts, NOW accounts, Christmas club accounts, and time deposits
(including certificates of deposit, "CDs") are all subject to FDIC
insurance coverage. Cashiers' checks, officers' checks, expense checks,
loan disbursement checks, interest checks, outstanding drafts,
negotiable instruments and money orders drawn on the institution are
also considered deposits, and so are also protected by FDIC.
Collectively, these types of instruments are referred to as "official
checks." For example, a cashier's check is a type of official check.
checks, letters of credit, and travelers' checks, for which an insured
depository institution is primarily liable, also are insured when
issued in exchange for money or its equivalent, or for a charge against
a deposit account.
Q. What is not insured by the FDIC?
The FDIC does not insure the money individuals invest in stocks, bonds,
municipal bonds, or other securities; mutual funds, (including money
market mutual funds, and mutual funds that invest in stocks, bonds and
other securities); annuities (which are contracts underwritten by
insurance companies that guarantee income in exchange for a lump sum or
periodic payment); or insurance products such as automobile and life
insurance even if these products were purchased at an insured bank or
through an affiliated broker/dealer/insurance agent that is offering
these products on behalf of a bank.
The FDIC does not insure U.S.
Treasury bills, bonds, or notes, but these are backed by the full faith
and credit of the United States Government.
Also, the FDIC
insurance doesn't cover valuables in safe deposit boxes. These
contents, however, may be covered either by the bank's private
insurance or the box holder's personal homeowner's insurance.
the FDIC does not insure against loss of funds due to robberies and
other thefts. Stolen funds may be covered by what's called a bank's
Hazard and Casualty insurance, which is a policy a bank purchases to
protect itself from fire, flood, earthquake, robbery, and physical
damage. In those rare instances where a bank employee may tamper with a
customer's account, the bank's blanket bond insurance (also called
fidelity bonds) may cover the loss and the funds would be returned to
the customer. Consumer protection laws such as the Electronic Funds
Transfer Act offer protections if a third party somehow gains access to
a customer's account.
Q. What types of financial institutions are insured by the FDIC?
The FDIC insures deposits in most, but not all, banks and savings
associations. All FDIC-insured institutions must display an official
sign at each teller window or teller station.
Q. Can insurance coverage be increased by depositing funds with different insured banks?
Deposits with each FDIC-insured bank are insured separately from any
deposits held at another insured bank. If an insured bank has branch
offices, the main office and all branch offices are considered one
insured bank. A depositor cannot increase insurance coverage by placing
deposits at different branches of the same insured bank. Similarly,
deposits held with the Internet division of an insured bank are
considered the same as funds deposited with the "brick and mortar" part
of the bank, even if the Internet division uses a different name.
Financial institutions that may be owned by the same holding company,
but that are separately chartered, are separately insured. Separately
chartered banks have different FDIC Certificate numbers.
Q. Can insurance coverage be increased by dividing my deposits into several different accounts at the same insured bank?
Deposit insurance coverage can be increased only if the accounts are
held in different categories of ownership. These categories include the
four most common consumer ownership categories: single accounts,
self-directed retirement accounts, joint accounts, and revocable trust
accounts; and the less common ownership categories: irrevocable trust
accounts, employee benefit plan accounts, corporation, partnership and
unincorporated association accounts, and public unit accounts.
Can insurance coverage be increased by using a different co-owner's
Social Security number on each account or changing the way the owners'
names are listed on the accounts?
A. Using different
Social Security numbers, rearranging the order of names listed on
accounts or substituting "and" for "or" in joint account titles does
not affect the amount of insurance coverage available to account owners.
Q. Can insurance coverage be increased by dividing my funds and depositing them into several different accounts?
Federal deposit insurance is not determined on a per-account basis. A
depositor cannot increase FDIC insurance by dividing funds owned in the
same ownership category among different accounts. The type of deposit
instrument — whether checking, savings, or CD — has no bearing on the
amount of insurance coverage.
Q. What happens when banks merge?
If an account owner has deposits in Bank A and Bank B and Bank A merges
into Bank B, deposits of Bank A continue to be insured separately from
the deposits of Bank B for at least six months after the date of the
merger. CD's from Bank A, the assumed bank, are separately insured
until the earliest maturity date after the end of the six month grace
Q. What happens when a bank fails?
The FDIC would either transfer the insured depositor's account to
another FDIC insured bank, or give the insured depositor a check equal
to their account balance. This includes the principal and interest
accrued through the date of the bank's closing, up to the insurance
If a bank fails, what is the timeframe for payout of the funds that are
insured if the bank cannot be acquired by another financial institution?
Federal law requires the FDIC to make payments of insured deposits "as
soon as possible" upon the failure of an insured institution. While
every bank failure is unique, there are standard policies and
procedures that the FDIC follows in making deposit insurance payments.
It is the FDIC's goal to make deposit insurance payments within one
business day of the failure of the insured institution. Typically, a
bank that has failed will be closed on a Friday. The FDIC will then
work the weekend to complete deposit insurance determinations for most
deposits and be prepared on Monday to either transfer the insured
portion of a deposit to another FDIC insured institution or provide
deposit insurance payment checks. (Note: Some deposits that require
supplemental documentation from the depositors, such as accounts linked
to a living trust agreement or funds placed by a deposit broker, may
take a little longer. The timing of the completion of the deposit
insurance determination is based solely on the depositor providing the
documentation needed by the FDIC to determine insurance coverage.)
Q. What happens to customers with uninsured deposits?
Customers who have uninsured deposits may recover a portion of their
uninsured funds, but there is no guarantee that they will recover any
more than the insured amount. The amount of uninsured funds they may
receive, if any, is based on the sale of the failed bank's assets.
Depending on the quality and value of these assets, it may take several
years to sell all the assets. As assets are sold, uninsured depositors
receive periodic payment on their uninsured deposit claim.
This site has been published in the United States for residents of the United States. The foregoing has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities, products and services offered through B.C. Ziegler and Company Member FINRA and SIPC.