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What's PlayingBazaarsNov. 21
St. Stanislaus School benefit, 9 to 4 in Kolbe Hall, Adams. Bake sale, snack bar, games, Chinese auctions, money raffle, crafts, and pierogi.
Blackinton Union Church, 1373 Massachusetts Ave., North Adams; 10 to 2. Crafts table, bake sale, Chinese auction, the Christmas table, and kid's grab bag. Lunch $4, $2 kids.
First Congregational Church, North Adams, 9-2.
Nov. 28
Becket Federated Church, Route 8, holiday bazaar from 9-3. Lunch, crafts, baked goods, holiday and other items. Information: Mary Peltier, Parish House, 413-623-5217.
Dec. 5
Holiday Fair at First Congregational Church, 25 Park Place, Lee, from 10 to 3; handcrafted items, raffles, children's shop, bake sale, cut Christmas trees and lunch from 11 to 1. Includes angel-themed goods from SERRV. Information, 413-243-1033 or www.ucc-lee.org.
Dec. 12-13
North Adams Country Club, crafts 9-4; food from That's a Wrap from 11-2. Information: Sheryl Morehouse at 413-822-3329.
Planning a bazaar this season? Submit information to info@iberkshires.com to have it listed here. |
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The Independent Investor: How Safe Is Your Brokerage Account?By Bill Schmick
iBerkshires Columnist
09:02PM / Thursday, August 14, 2008
 | | Bill Schmick |
"I've got a brokerage account," asked one of my southern state clients last week, "and I'm wondering what happens to my money if they go bust?"
It is a type of phone call I have been fielding quite often these days as the financial crisis continues to build.
The near collapse of Bear Sterns, the more than $400 billion in write-downs of mortgage-backed investments and recent speculation that the total bill for future write downs by banks and brokers could equal or even exceed $1 trillion has individual investors increasingly worried about the safety of their invested cash and securities.
Only over the last two weeks (and only after Andrew Cuomo, New York's attorney general, put a gun to their heads) did the likes of Merrill Lynch, Citigroup, UBS and Morgan Stanley finally agree to return billions to well-healed, individual investors hurt in the auction rate securities markets.
Although that was a welcome development, there is a catch: much of that money won't be returned anytime soon. It may take up to two years before these investors are made whole again.
Given this state of financial affairs, it is no wonder that frightened investors are concerned. Barron's, the weekly investment paper, noted that the large brokerage firms are seeing some asset outflow with both Citigroup and Merrill Lynch experiencing the largest decline while naming Charles Schwab and Fidelity Investments as two companies that are seeing net inflows as a result of their healthy operations.
So what protection does the investor really have? Most of us are familiar with the Federal Deposit Insurance Corp. (FDIC), which is a quasi-governmental entity that insures up to $100,000 in bank deposits. Your investments with nearly all big investment houses and brokers are protected by the Securities Investor Protection Corp. It covers stocks, bonds and other assets (but not futures or commodity contracts) held at a brokerage and covers up to $500,000 per account including a $100,000 limit on cash. Money market funds, in case you were wondering, are considered funds and not cash.
Investors have another layer of protection in the event a broker goes bankrupt. The Securities and Exchange Commission has stringent rules about segregating the broker's money from the customer's investments. So even if the broker goes belly-up, chances are your money will remain intact. If the broker fails, the first thing the SPIC will try to do is transfer your securities to another firm. Failing that, it will attempt to rebuild your portfolio, even buying new securities to make up for missing shares or if that's not possible they will give you cash. But this takes time and you can be out of pocket for months or more before you get your money back
That's the good news. However, readers should understand there is no insurance for investment fraud in this country. If a broker goes bust and your investments are missing from your account the SPIC will replace them up to the half million dollar maximum. But the SPIC won't compensate you for any losses in value that may have occurred while the securities were missing. And unlike the FDIC, which provides automatic coverage, it is your responsibility to file a claim with SPIC for missing assets, normally within 180 days.
So what are some warning signs to look for if you do have your life savings at a broker? Make sure that your firm is a member in good standing with the SPIC and that all your transactions are made through that entity and not some uncovered subsidiary of the brokerage house. Some SIPC members have non-member affiliates backed by organizations with official-sounding acronyms that provide no protection whatsoever.
Another sign of possible trouble is late or inaccurate statements without a reasonable explanation. Remember, too, to always keep your statements since if you ever have to make a claim you will need your statements to prove what was in your account.
Although brokerage failures are rare — only one case in the last six months — the best way to avoid these problems, especially in uncertain times like today, is to keep your assets at a reputable and financially healthy firm with limited exposure to those areas of the market that are in difficulty. All our clients' assets, for example, are held in custody at Fidelity which has rivaled the Rock of Gibraltar in stability throughout this period.
Bill Schmick is a licensed investment adviser representative and portfolio strategist with Berkshire-based Dion Money Management, managing over $800 million for middle-class Americans from coast to coast. Direct your inquiries to Bill at 1-877-850-7942, Ext. 146 (toll free) or wschmick@dionmm.com. You can also visit www.afewdollarsmore.com for more of Bill’s insight.
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