Broker stumbles, Bryce takes a fright, but SIPC's shield holds assets tight. Stocks and cash, a covered stack, $460,000, a safety net's crack. Remember, though, not all treasures gleam, so choose your broker with foresight's keen beam.
The amount SIPC would cover for Bryce's account depends on two factors:
1. Type of assets:
Securities: SIPC covers up to $500,000 for the combined value of stocks, bonds, options, and other eligible securities in the account.
Cash: SIPC covers up to $250,000 for cash held in the account.
2. Account level:
Single account: If Bryce only has one account with the broker-dealer, SIPC would cover the full eligible value up to the respective limits ($500,000 for securities and $250,000 for cash).
Multiple accounts: If Bryce has multiple accounts with the same broker-dealer, SIPC would combine the eligible values of all accounts and cover up to the limits, with a maximum of $500,000 for securities and $250,000 for cash across all accounts.
In Bryce's case:
He has $300,000 in stocks, which falls within the $500,000 coverage limit for securities.
He has $160,000 in cash, which is less than the $250,000 coverage limit for cash.
Therefore, if the broker-dealer runs into financial problems, SIPC would most likely cover the entire $460,000 of eligible assets in Bryce's account ($300,000 in stocks + $160,000 in cash)
Important note:
SIPC coverage only applies to cleared and non-cleared securities held in Street Name (meaning held by the broker-dealer on Bryce's behalf). Assets held in Bryce's name directly with a transfer agent or custodian are not covered by SIPC.
It's also important to remember that SIPC coverage is a safety net, not a guarantee. It's still crucial to choose a reputable and financially stable broker-dealer to minimize the risk of needing to rely on SIPC coverage.