Here's something for you to review should you have the time. I'm all in for this effort in the State of Washington. Thought I might start with my local League of Women Voters who seem quite strong in this state. The following article may have been damaged by a recent hacking since on one page the sentence just drops off and the rest is blank. Sad.
To protect yourself from the risks associated with a brokerage firm's insolvency, consider the following strategies:
1. **Direct Registration System (DRS)**: Use DRS to register your securities directly in your name, rather than holding them in "street name" through a broker. This provides more security but can be costly and inconvenient[1].
2. **Choose a Reputable Broker**: Select brokers with strong financial health and good reputations to minimize risk[1].
3. **Investor Protection Funds**: Ensure your broker is a member of protection schemes like the Securities Investor Protection Corporation (SIPC) in the U.S., which covers up to $500,000 in securities[3][4].
4. **Avoid Fractional Shares**: These may not offer the same level of protection as fully paid securities[1].
5. **Stay Informed**: Regularly review account statements and stay informed about your broker's financial health[5].
Well, that sucks. Based on a quick AI session on perplexity, seems you are correct:
Under Article 8 of the UCC, if your broker becomes insolvent due to default on secured loans, you might face risks regarding the priority of your investment holdings. Article 8 generally protects entitlement holders by ensuring that securities intermediaries cannot repledge securities in a customer's account without consent[5]. However, in insolvency scenarios, the situation can become complex. If a broker has repledged your securities as collateral for its own obligations, and it defaults, your claim to those securities may become subordinate to the claims of secured creditors who have control over the assets[5]. This could potentially impact your priority in recovering your investments.
A better copy of A History of Central Banking and the Enslavement of Mankind
https://ia801703.us.archive.org/26/items/a-history-of-central-banking-and-the-enslavement-of-mankind-pdfdrive/A_History_of_Central_Banking_and_the_Enslavement_of_Mankind__PDFDrive_.pdf
Here's something for you to review should you have the time. I'm all in for this effort in the State of Washington. Thought I might start with my local League of Women Voters who seem quite strong in this state. The following article may have been damaged by a recent hacking since on one page the sentence just drops off and the rest is blank. Sad.
https://archive.org/details/a-history-of-central-banking-and-the-enslavement-of-mankind-pdfdrive/mode/2up
And what to do?
To protect yourself from the risks associated with a brokerage firm's insolvency, consider the following strategies:
1. **Direct Registration System (DRS)**: Use DRS to register your securities directly in your name, rather than holding them in "street name" through a broker. This provides more security but can be costly and inconvenient[1].
2. **Choose a Reputable Broker**: Select brokers with strong financial health and good reputations to minimize risk[1].
3. **Investor Protection Funds**: Ensure your broker is a member of protection schemes like the Securities Investor Protection Corporation (SIPC) in the U.S., which covers up to $500,000 in securities[3][4].
4. **Avoid Fractional Shares**: These may not offer the same level of protection as fully paid securities[1].
5. **Stay Informed**: Regularly review account statements and stay informed about your broker's financial health[5].
Sources
[1] what would be the safety if the broker goes bankrupt after you ... https://www.reddit.com/r/eupersonalfinance/comments/15dirpl/what_would_be_the_safety_if_the_broker_goes/
[2] Will I be protected if my brokerage firm becomes insolvent? https://advocatedaily.com/brokerage-firm-becomes-insolvent/
[3] Brokerage Accounts: Risks, Protections, and Alternatives https://www.eagleridgeinvestment.com/brokerage-accounts-risks-protections-and-alternatives/
[4] If a Brokerage Firm Closes Its Doors | FINRA.org https://www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors
[5] What Happens When a Stockbroker Goes Bust? - Investopedia https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp
[6] What Happens to Stocks If a Brokerage Goes Bankrupt? - Financhill https://financhill.com/blog/investing/what-happens-to-stocks-if-a-brokerage-goes-bankrupt
[7] Securities Investor Protection Act (SIPA) | United States Courts https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/securities-investor-protection-act-sipa
[8] Process - Bankruptcy Basics https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics
Well, that sucks. Based on a quick AI session on perplexity, seems you are correct:
Under Article 8 of the UCC, if your broker becomes insolvent due to default on secured loans, you might face risks regarding the priority of your investment holdings. Article 8 generally protects entitlement holders by ensuring that securities intermediaries cannot repledge securities in a customer's account without consent[5]. However, in insolvency scenarios, the situation can become complex. If a broker has repledged your securities as collateral for its own obligations, and it defaults, your claim to those securities may become subordinate to the claims of secured creditors who have control over the assets[5]. This could potentially impact your priority in recovering your investments.
Sources
[1] In the Ditch: Remedies and Enforcement upon Default under the UCC https://www.americanbar.org/groups/business_law/resources/business-law-today/2023-march/remedies-enforcement-upon-default-under-ucc/
[2] THE RELATION OF FEDERAL AND STATE https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1858&context=lcp
[3] [PDF] Qualified Financial Contracts And Netting Under U.S. Insolvency ... https://www.clearygottlieb.com/-/media/organize-archive/cgsh/files/2017/publications/qualified-financial-contracts-and-netting-under-us-insolvency-laws.pdf
[4] 2006 Ohio Revised Code - 1308.33. (UCC 8-115) Securities intermediary and others not liable to adverse claimant; (UCC 8-116) securities intermediary as purchaser for value. https://law.justia.com/codes/ohio/2006/orc/jd_130833-56fb.html
[5] Avoiding Collateral Damage: Taking the (Re)Pledge [Part III] https://www.jdsupra.com/legalnews/avoiding-collateral-damage-taking-the-9725513/
[6] Process - Bankruptcy Basics | United States Courts https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics
[7] [PDF] SEA Rule 15c3-1 - finra https://www.finra.org/sites/default/files/SEA.Rule_.15c3-1.Interpretations.pdf
[8] Section 1308.58 | Duty of securities intermediary to change entitlement holder's position to other form of security holding - UCC 8-508. https://codes.ohio.gov/ohio-revised-code/section-1308.58