When a stockbroker goes bankrupt, a court will appoint a trustee for the broker and its assets. The trustee will go through the broker's records to ensure that they are complete, before transferring customer accounts and assets to a new provider. In the event that customer funds or securities are lost, brokerage accounts are insured by the SIPC up to the amount of $500,000. Customer accounts and assets remain protected, although there may be a window of time when they cannot trade.<\/span><\/p>"
}
}
,
{
"@type": "Question",
"name": "Do Stockbrokers Ever Go Bankrupt?",
"acceptedAnswer": {
"@type": "Answer",
"text": " While rare, it is possible for a brokerage firm to go bankrupt. This usually happens as the result of brokerages that are part of a larger investment bank, which fails due to mismanagement or risk-taking by the parent company. Bear Stearns and Lehman Brothers are both examples of brokerages that failed due to overexposure to the subprime mortgage market. When that happens, regulators will work with the liquidated firm to make sure that customer assets are transferred to a new custodian.<\/span><\/p>"
}
}
,
{
"@type": "Question",
"name": "How Does the SEC Protect Stock Traders?",
"acceptedAnswer": {
"@type": "Answer",
"text": " The SEC has several regulations and requirements for brokerage firms that are intended to protect the broker's clients. The customer protection rule requires brokers to safeguard customer assets and prohibits them from being commingled with the broker's assets. And the net capital rule requires brokers to maintain a certain level of liquid capital to protect customers from monetary losses.<\/span><\/span><\/p>"
}
}
]
} ] }
]