Account Protection
Trading Direct is a division of York Securities, Inc., who is a member of the Securities Investor Protection Corporation (SIPC). Accounts are carried by the clearing firm, Penson Financial Services, Inc., member SIPC. The Securities Investor Protection Corporation ("SIPC") provides $500,000 of net equity protection, including $100,000 for claims for cash awaiting reinvestment ("SIPC coverage").
Penson Financial Services, Inc. (Penson) is a member of the Securities Investor Protection Corporation (SIPC), which protects cash and securities held in customer accounts of its members up to a ceiling of $500,000, including a maximum of $100,000 for cash claims. For information regarding SIPC protection, contact SIPC at (202) 371-8300 or visit www.sipc.org.
Penson has purchased an additional insurance policy through a group of London Underwriters (with Lloyd's of London Syndicates as the Lead Underwriter) to supplement SIPC protection. This additional insurance policy becomes available to customers in the event that SIPC limits are exhausted and provides protection for securities and cash up to an aggregate of $600 million. This is provided to pay amounts in addition to those returned in a SIPC liquidation. This additional insurance policy is limited to a combined return to any customer from a Trustee, SIPC and London Underwriters of $150 million, including cash of up to $2 million.
Similar to SIPC protection, this additional insurance does not protect against a loss in the market value of securities.
About the SIPC
The Securities Investor Protection Corporation (SIPC) is a non-profit organization established by the Congress of the United States to insure client accounts against the failure of member brokerage firms. You can obtain more information by visiting http://www.sipc.org.
Excess SIPC Coverage - Frequently Asked Questions
Q: How is my customer’s account protected with "excess SIPC" coverage?
A: Customer accounts are protected in the event that SIPC limits are exhausted. The additional insurance becomes effective after the implementation of SIPC coverage. The coverage is in place to protect the customer in the event of a theft, misplacement, destruction, burglary, embezzlement or abstraction of customer securities. It does not protect the customer from declining changes in market value.
Q: What triggers SIPC and "excess SIPC" coverage?
A: Three things must happen for SIPC and "excess SIPC" coverage to be triggered:
• There is a financial failure and a liquidation of the carrying Broker Dealer
• Securities/Cash are missing from an account
• SIPC pays each client in accordance with their pro-rated share of the loss, up to $500,000 per account (of which $100,000 may be cash)
Q: What is the amount of coverage that the London Underwriters provide?
A: This additional insurance policy is limited to a combined return to any customer from a Trustee, SIPC and London Underwriters of $150 million, including cash of up to $2 million. A $600 million aggregate limit applies as well, which is the most that the London Underwriters will pay in the event of liquidation.
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