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0 pointstoomuchtodo6y ago0 comments

It's possible SIPC insurance steps in and provides cash value, with your fractional ownership relinquished.

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slg6y ago

Doesn't that rely on you being the actual owner of the shares? If your shares only exist in Robinhood's database, I don't think SIPC would apply.

EDIT: After some Googling it appears that SIPC does protect securities that weren't actually purchased due to fraud or mismanagement. IANAL so I don't know if that would apply to this specific situation, but they have protected other non-owners before like in the case of Bernie Madoff.

jdsully6y ago

Even with full shares they are held in street name - that is the brokerages name. So the story isn't much different than it is today.

Animats6y ago

No, they are held in "street name" but the customer still owns them. You're not just a creditor of the broker. I've had a broker go bust, so I've been through the unwinding process.

A broker which just has pretend stock ownership as a book entry with the broker is called a "bucket shop".[1] A crime in most US states since the 1920s.

[1] https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

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