Spreading out Financial resources

[Chuckanut]

The recent revelations of how the IT systems of both Target and Neiman Marcus were compromised by crimininals, and the fact that the criminals were able to operate for several weeks before being detected has got me wondering about security and the firms that I have my financial resources with.

All these forms are insured by SIPC, but I am not sure what would happen if criminals broke into one and messed with account information. Does SIPC insure if criminals steal funds from customer's accounts after breaking into the IT systems of major banks and financial institutions?

Even if the customer is eventually made whole, how long will that take before he/she can get at their money?

Also, SIPC insurance has a limit of $500,000. Do others feel safe with that? Or do you spread your money around to more than one institution?

 

[Chuckanut]

I found this:

Keep in mind SIPC only steps in when a firm shuts down due to financial circumstances in which customer assets are missing.

and this:

The following would qualify as separate legal entities, each subject to the $500,000 limit: your individual account, your trust, your IRA, your spouse’s individual account, trust and IRA, your joint account, as well as a custodial account for a child. Two IRA accounts held by the same client would be considered one legal entity and thus are combined for purposes of insurance coverage. The same combination occurs when a single client holds two individual taxable accounts.

Presumably, if one's assets are missing because high tech criminals managed to get into the computer system and drain away the assets, SIPC would cover that loss.

 

[Animorph]

Many brokerages have higher coverage limits.

I'm a little leery of putting everything into one place. But two fairly different places, with one having enough to keep me going for a few months, seems like enough. That should take care of computer outages and waiting for SIPC to settle up.

 

[Chuckanut]

I'm a little leery of putting everything into one place. But two fairly different places, with one having enough to keep me going for a few months, seems like enough. That should take care of computer outages and waiting for SIPC to settle up.

I tend to feel the same. What has me spooked, perhaps unnecessarily, is the fact that the criminals were able to work inside Target's system for weeks before being detected. I heard they were in Neiman Marcus' system for months before being detected. That is frightening.

 

[MrYoung]

I completely know the feeling of having to spread money out when saving. Everyone has their own balances but for me I find I have to spread it out over so many savings accounts so that they all appear to be so small that I wouldn't want to take any out. Sounds odd but that's my way.
'Always doing your own due diligence.' is a very true saying Chuckanut.

I would hope that the bank insures that money so you don't have to worry about it being safe. As long as you keep your side of the records and, like you said, spread it out enough.