The Securities Investor Protection Corporation (SIPC) was created to protect against the loss of customer assets at brokerage firms. SIPC offers protection of up to $500,000, including a $250,000 limit for cash, if a brokerage firm fails and covers most types of securities, such as stocks, bonds, and mutual funds.
But from what I read it seems like having more than 500K is ok as money/stocks are kept separate. I suppose that means that they can’t take your stocks and cash and do bad things to make money off your assets. So there would not be stuff like FTX occurring.
I suppose banks are different as they are supposed to lend out your money. Surprising how banks can fail since they pay so little interest and loans should earn much more – unless the loans default but that wasn’t the case with SVB. SVB was a lack of liquidity I suppose. If there wasn’t a run on the bank, everyone would have been safe and SVB wouldn’t of had to sell their bonds before maturity for a loss.
