So, You Think Your Stocks Held for You by Your Brokerage Firm Are Insured. Think Again.

Tea Party Economist reports:

Renowned economics professor Laurence Kotlikoff says SIPC (Securities Investor Protection Corporation) is an insurance scam from Fraud Street. Dr. Kotlikoff contends, “If you look at the history of their response as it’s been discovered, they (SIPC) have been fighting tooth and nail never to pay a dollar. So, the situation is not that we don’t have any insurance for your brokerage account, it’s far worse. . . . There’s a Ponzi scheme discovered every four days, according to a recent New York Times article. So, they can declare a fraud very easily.”

As an example, Dr. Kotlikoff gives someone who lost $2 million and is expecting to get back at least the SIPC insurance claim of $500,000, the maximum payout. Instead of getting money back, SIPC expects money back from you! Dr. Kotlikoff explains, “So, you are at double jeopardy here. It’s not just that you can get totally screwed by a brokerage firm, which is happening every four days because a Ponzi scheme is being discovered, you can also be at great jeopardy by SIPC itself.” Meaning, SIPC cannot only deny your claim, but it can sue you for any profits you made beyond your original investment if there are losses because of a fraudulent brokerage. Dr. Kotlikoff adds, “So, they are running a complete insurance scam. It’s a disgrace. There is a bill in front of Congress that would correct this, but so far, members of Congress have not pushed it through.”

You'll want to read this one.