I know what you're thinking. My stocks and bonds are safe because they have SIPC insurance coverage.

Are they really though? We're going to be looking at that today.

Hello everyone. I am Dr. Chris Martinsen of Prosperity, and we are continuing our in-depth

coverage that was kicked off by the great work of David Rogers Webb around this idea of

the great taking. What are the legal parameters of your ownership of your stocks and bonds?

It's not as simple as you think because we now have an indirect ownership model. It has pluses and

minuses, pros and cons and risks that have not been fully disclosed, at least in my world

and in my view. So we're going to look at that today and today we're going to in particular

take a close, close look at the SIPC insurance idea. Now before we go there, let's remember that the way this whole thing

has been set up is that you have a security entitlement. And the way this is supposed to work

is carried out in this 15C3-3 ruling right here. This is the law. And here's what the law says. This is important. So if your broker is holding an account for you, it says here according to 15c3-3 and I know it sounds boring. But trust me, the devil is always in the details and it's time for you to be aware of these details. Time for me to be aware of them. As well, we can read for ourselves

what they say here and it says physical possession or control of securities when they say physical

possession. They don't really mean that anymore. Obviously it's a book entry, but you have control over.

Control being the operative word. Does your broker have control over your stocks and bonds? And most importantly,

have they done anything to cede that control to somebody else? And here's what they have to do.

It's called the customer protection rule. And it's about the reserves and custody of securities.

It says a broker or a dealer shall promptly, let's say you buy a thousand shares of Tesla, they shall promptly obtain and shall thereafter maintain the physical possession or control, the electronic equivalent, of all fully paid securities, which means a cash account. There's two types of accounts you need to know about cash accounts.

One, or this other thing called they have to maintain excess margin securities carried

by the broker or the dealer for the account of customers.

So we're going to talk about what excess margin securities means in just a second. But for now, all you need to know is the law says your broker-dealer has to maintain control of your securities. Now, what happens if your broker goes bankrupt? That's where the SIPC steps in and it turns out it's not as easy as it might

seem at first glance to say, well, if I own my stocks and bonds and they're mine and they're

in a segregated account that belongs to me and regulators have been watching to make sure that my

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