FOR IMMEDIATE RELEASE
March 26, 2008 
Contact: Jason Moon 517-335-1700

LANSING - In the wake of recent turbulence in the financial markets, the Office of Financial and Insurance Services (OFIS) today joined with the Securities Industry Protection Corporation (SIPC), to remind investors of the important and effective safeguards already in place to protect their brokerage account assets.

“In light of the recent financial impairment of a major Wall Street firm and the ongoing volatility in the U.S. securities markets, it is understandable that Michigan investors may have questions about the safety of assets in their brokerage accounts,” said OFIS Commissioner Ken Ross. “OFIS and SIPC want to ensure that investors are well informed about their rights and protections under our nation’s securities laws.”

SIPC maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms. The statute that created SIPC guarantees that customers will receive all non-negotiable securities such as – stocks or bonds – that were purchased through a failed brokerage firm and funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. 

Rules of the U.S. Securities and Exchange Commission (SEC) require registered broker-dealers to maintain net capital to provide financial resources so that customers will get their cash and securities back if the firm fails. According to the SEC, customer claims for their funds and securities are senior to other claims on the broker-dealer.

In addition to the protections provided by SIPC and the SEC’s net capital rule, the SEC requires registered broker-dealers to place client assets into accounts segregated from the brokers’ own proprietary funds and securities. As a result, clients are protected from the firm’s trading losses. 

If Michigan investors have any questions about an investment firm, professional or product, please contact OFIS toll-free at (877) 999-6442 or online at www.michigan.gov/ofis.