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understand how important it is for you to feel confident that
your assets are totally protected. Through our relationship
with Ridge Clearing (the custodian of your account), assets
in your Valet account are protected up to the total net equity
in your account. SIPC* provides the first $500,000 of coverage
(including $100,000 for cash balances). The additional excess
SIPC coverage of unlimited net equity is provided by Travelers
Casualty and Surety Company at no cost to you.
About
Account Protection...
What
account protection does Ridge Clearing provide?
Ridge Clearing provides account protection
up to an account's total net equity. Specifically, the Securities
Investor Protection Corporation (SIPC) provides up to $500,000
to protect the assets in each account you hold in separate
capacity (for instance, joint tenant, sole owner, etc.). $100,000
of this amount covers between-investment cash balances. In
addition, the Travelers Casualty and Surety Company provides
secondary "excess" SIPC coverage of unlimited net
equity with no cash limit.
What
kinds of assets are covered?
Your stocks, bonds, mutual funds, notes,
debentures, money market funds and certificates of deposit
are protected in the event of losses resulting from your brokerage
firm's insolvency or liquidation.
However,
it is important to note that the account protection offered
by SIPC and the Travelers Casualty and Surety Company does
not protect against losses due to market fluctuations.
What
is the Securities Investor Protection Corporation (SIPC)?
SIPC is a non-profit member organization
of broker-dealers created in 1970 by an act of Congress. It
protects customers of those broker-dealer members that for
some reason cannot meet financial obligations to their customers.
Where
does SIPC get the funds to protect me?
SIPC can draw on approximately $790
million of member contributions and interest earned from U.S.
government securities. It also has a $1 billion line of credit
with a bank consortium. And, if necessary, SIPC can also borrow
up to $1 billion from the U.S. Treasury.
Is
my cash account and my individual retirement account (IRA)
protected separately?
Yes. Ridge Clearing has arranged for
unlimited account net equity protection for each account in
which you act in a different capacity.
How
would SIPC satisfy my claim?
SIPC recovers all of the cash and securities
it can from your broker-dealer -- then uses its own funds
to satisfy any additional claims you may have.
What
if I have more than $500,000 worth of securities and cash
at risk?
If your remaining claim exceeds the
$500,000 provided by SIPC (after the cash and securities recovered
from your broker-dealer are returned to you), Ridge Clearing
will use the additional protection offered through the Travelers
Casualty and Surety Company to cover your securities -- up
to the account's total net equity.
Is
the coverage offered by my broker-dealer (through Ridge Clearing)
affected by the S&L bailout?
Not at all. The Federal Deposit Insurance
Corporation (FDIC) and the former Federal Savings and Loan
Insurance Company (FSLIC) are responsible for compensating
customers of liquidated banks and savings & loans. SIPC
protection offered by broker-dealers is in no way connected
with the S&L bailout or the FDIC.
*SIPC (Securities Investor Protection Corp.)
insures the assets held in brokerage accounts if the brokerage
firm fails. SIPC does not protect investors against investment
decline or loss.
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