Posted by JT-IN on March 29, 2008 at 15:07:09:
In Reply to: Re: FDIC/bank insurance questions posted by Dave T on March 29, 2008 at 13:31:35:
Securities Investor Protection Corp.
Here is a quote from their website: "It is important to understand that SIPC is not the securities world equivalent of FDIC–the Federal Deposit Insurance Corporation."
SIPC is limited in many ways. It is a 1 Bil fund protecting up to 40 Bil, so there are many back doors in which they can refuse to pay a claim. Fraud is covered and insolvency , (hopefully, if not too many brokerages default at one time).
The other distinction is that many CD's sold thru brokerages are NOT FDIC insured, but sipc, and there exists some underlying investment risk of the cd itself. Deep subject but not exactly an apples to apples comparison and your 10 mil doesn't have the same protection than if the entire 10 mil was in FDIC insured banks and diversified for full coverage.
Just pointing out some things that you are likely aware of, but others may not be.
JT-IN