Ira/401k theft

[audreyh1]

A few years ago Fidelity and maybe some other brokerages spelled out the protections they offered their customers against unauthorized access to their account. They call it the Fidelity Customer Protection Guarantee which protects you against unauthorized access, but you do have to obey some rules. https://www.fidelity.com/security/customer-protection-guarantee

Fidelity also offers insurance above the standard SIPC Insurance.

Excess of SIPC

In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.

Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account and securities held in book entry form.

from https://www.fidelity.com/why-fidelity/safeguarding-your-accounts

 

[MRG]

A few years ago Fidelity and maybe some other brokerages spelled out the protections they offered their customers against unauthorized access to their account. They call it the Fidelity Customer Protection Guarantee which protects you against unauthorized access, but you do have to obey some rules. https://www.fidelity.com/security/customer-protection-guarantee

Fidelity also offers insurance above the standard SIPC Insurance.
from https://www.fidelity.com/why-fidelity/safeguarding-your-accounts

Two others, Vanguard and Schwab both have the same type of guarantee. I've not found any other organizations in writing.

 

[Blue Collar Guy]

This I like, Im going to call Vanguard on Monday and see if I can do some sort of "do not send any money to me without double checking."

OK, I didn't get to do it yesterday , But Im on the phone with them now. I must have stumped them, because after 2 holds, I got transferred to some one. Voice print. This is what they did. They then assured me they would only send money to my 1 linked checking account. They will also now text me some secret code

 

[mathjak107]

Oh wow, so did you assume other personal info was out there as well and freeze and change all other financial holdings?

no nothing else was changed

 

[mathjak107]

A few years ago Fidelity and maybe some other brokerages spelled out the protections they offered their customers against unauthorized access to their account. They call it the Fidelity Customer Protection Guarantee which protects you against unauthorized access, but you do have to obey some rules. https://www.fidelity.com/security/customer-protection-guarantee

Fidelity also offers insurance above the standard SIPC Insurance.
from https://www.fidelity.com/why-fidelity/safeguarding-your-accounts

keep in mind only brokerage accounts carry the sipc and extra insurance , mutual fund accounts do not. brokerage accounts are held in street name and need the protection . mutual fund accounts are held directly .

this is the policy at vanguard ,fidelity ,etc .


Are mutual funds covered by SIPC?

No, mutual funds generally aren't covered by the Securities Investor Protection Corporation unless they are held in a brokerage account. But don't panic: The funds are subject to very strict regulations that protect your money.
The Investment Company Act of 1940 created an intricate system of checks and balances to keep mutual fund money safe.
Each mutual fund is organized as a separate company from the fund's management, and its assets are held by an independent custodian, usually a specialized bank. Even if the fund-management company goes bankrupt, its creditors can't touch the money in the mutual fund, which is held in a separate trust for investors.
The custodian must keep the mutual fund's assets separate from its other accounts and can't touch the money even if the bank fails.

 

[gauss]

I just heard that the SEC only insures up to 500k per account.

Also I think that protection is only for the case of financial failure of the brokerage -- not necessarily for a fraud where assets are lost.

If someone steals your assets and the brokerage does not go bankrupt, then the coverage would not apply.

edit:

I found a reference at the SIPC website:

Does SIPC protect me if my account is hacked and cash and/or securities are stolen?

SIPC’s role and responsibilities are as defined under the Securities Investor Protection Act (SIPA). Under that law, SIPC only becomes involved when a SIPC member brokerage firm is eligible for liquidation under the Securities Investor Protection Act. If you discover that your account has been hacked or your securities or cash have been stolen, you should contact your brokerage firm, the SEC, FINRA, your state securities regulator, and/or law enforcement authorities.

-gauss

 

[audreyh1]

keep in mind only brokerage accounts carry the sipc and extra insurance , mutual fund accounts do not. brokerage accounts are held in street name and need the protection . mutual fund accounts are held directly .

this is the policy at vanguard ,fidelity ,etc .


Are mutual funds covered by SIPC?

No, mutual funds generally aren't covered by the Securities Investor Protection Corporation unless they are held in a brokerage account. But don't panic: The funds are subject to very strict regulations that protect your money.
The Investment Company Act of 1940 created an intricate system of checks and balances to keep mutual fund money safe.
Each mutual fund is organized as a separate company from the fund's management, and its assets are held by an independent custodian, usually a specialized bank. Even if the fund-management company goes bankrupt, its creditors can't touch the money in the mutual fund, which is held in a separate trust for investors.
The custodian must keep the mutual fund's assets separate from its other accounts and can't touch the money even if the bank fails.

I actually did not know that. Thanks! Most of our assets which are predominantly mutual funds, are owned through brokerage accounts.

I do take into account the fund family managing/organizing mutual funds as well as knowing that mutual funds are set up as entities independent of any financial organization with their own (supposedly) independent boards of directors, etc

Are Mutual Funds Insured by SIPC?

Oddly enough, the answer is "it depends."

Mutual fund shares held in a brokerage account are indeed covered by SIPC insurance in the event that they are misappropriated. However, mutual funds purchased directly from a mutual fund company like Vanguard are not insured by the SIPC. This should not present a problem, however. In a mutual fund, all the assets are held in a trust account by a bank custodian. The trust account is separate from the bank's assets and should not be exposed if the bank becomes insolvent.

Are Your Investments Insured? - Fisher Financial Strategies, Boston and Cambridge, MA - Updates, Notes and Thoughts on Financial Planning

P.S. Can't believe I linked a page from Fisher Investments!! But it's a nice little overview.

 

[gauss]

Are Mutual Funds Insured by SIPC?

Oddly enough, the answer is "it depends."

Mutual fund shares held in a brokerage account are indeed covered by SIPC insurance in the event that they are misappropriated. However, mutual funds purchased directly from a mutual fund company like Vanguard are not insured by the SIPC. This should not present a problem, however. In a mutual fund, all the assets are held in a trust account by a bank custodian. The trust account is separate from the bank's assets and should not be exposed if the bank becomes insolvent.

Just to be clear, I find this paragraph to be quite misleading.

My understanding is that there is no SIPC insurance against misappropriated mutual funds unless the broker/dealer has been declared insolvent (ie bankruptcy).

Stolen funds and brokerage insolvency can be two distinct events.

-gauss

 

[Freedom56]

Most brokerages such as TD Ameritrade, Schwab, and Fidelity (I have all three) have extra security such as checking the PC ID and IP address you are using to connect to your account. When an unknown PC ID or IP address is detected, it asks you security questions that you have set up with your account. This is the same for bank accounts with Citibank or most other major banks. So it takes more than your userid and password to access your account these days. Someone has to have access to your userid, password, and responses to your security questions to access your access to your accounts from a PC and location other than your own.

 

[audreyh1]

Most brokerages such as TD Ameritrade, Schwab, and Fidelity (I have all three) have extra security such as checking the PC ID and IP address you are using to connect to your account. When an unknown PC ID or IP address is detected, it asks you security questions that you have set up with your account. This is the same for bank accounts with Citibank or most other major banks. So it takes more than your userid and password to access your account these days. Someone has to have access to your userid, password, and responses to your security questions to access your access to your accounts from a PC and location other than your own.

My brokerages and several banks even recognize when I am accessing my account from overseas, even though it's my laptop that had been recently used in the US. I usually have to go through extra security steps the first time, plus Fidelity has extra verbiage you have to acknowledge about overseas accounts.

 

[Freedom56]

My brokerages and several banks even recognize when I am accessing my account from overseas, even though it's my laptop that had been recently used in the US. I usually have to go through extra security steps the first time, plus Fidelity has extra verbiage you have to acknowledge about overseas accounts.

Yes that's the IP address check that they perform. IP addresses indicated your location through the look-up database.

 

[Blue Collar Guy]

Most brokerages such as TD Ameritrade, Schwab, and Fidelity (I have all three) have extra security such as checking the PC ID and IP address you are using to connect to your account. When an unknown PC ID or IP address is detected, it asks you security questions that you have set up with your account. This is the same for bank accounts with Citibank or most other major banks. So it takes more than your userid and password to access your account these days. Someone has to have access to your userid, password, and responses to your security questions to access your access to your accounts from a PC and location other than your own.

I like this, and since its late at night, I think its a nice way to end the evening, on a nice positive note, ty.