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Wall Street Scams Main Street: SIPC Investor Insurance for $150 Premium

Posted by Larry Doyle on November 2nd, 2009 12:25 PM |

Of all the insults, and all the fraud, and all the arrogance that has emanated from Wall Street over the last few years, there is no doubt that one of the greatest unknown travesties perpetrated on the American public is the insurance purchased by Wall Street firms to protect investor interests.  How so?

For those listening to my interview with noted attorney Helen Davis Chaitman of Phillips Nizer last evening, you would have heard how the Securities Investor Protection Corporation funds itself. Who exactly is SIPC? From SIPC’s website we learn:

When a brokerage firm 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 customers’ cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court.

Although not every investor is protected by SIPC, no fewer than 99 percent of persons who are eligible get their investments back from SIPC. From its creation by Congress in 1970 through December 2008, SIPC advanced $520 million in order to make possible the recovery of $160 billion in assets for an estimated 761,000 investors.

Thus we learn SIPC is an insurance fund launched in 1970 to protect investor interests. Sounds like a good idea.

Ms. Chaitman informed us that SIPC has reserves of $1.7 billion dollars. Is that good, bad, or indifferent? Well, for an industry with trillions in exposure, reserves of $1.7 billion seem rather light. (more…)






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