It is my understanding that if I keep my stocks in street name it is legally owned by the broker. As a result, if the broker successfully sued for a lot of money ( say 5 billion ) I would expect the person/organization winning the suit to be able to take away my stock and as a result some of my stock would be lost.

I understand that at this point, SIPC would cover the first $500,000 of my portfolio. I also understand that my broker's have supplemental insurance. However, the supplemental insurance has an aggregate limit which is typically much smaller than the value of all the security the broker is holding for its clients.

Is my reasoning right? Is there something I am missing?

Note: I live in the United States


Your reasoning is incorrect.

In Street Name means that your securities are registered electronically in the name of the brokerage firm.

However, you are the actual beneficial owner and you own the rights associated with the security. They cannot be taken away from you because of litigation against your broker.

And FWIW, while the SIPC limit is indeed $500k, the cash coverage maximum is $250k.

| improve this answer | |

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.