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Pastimes : Ask Mohan about the Market
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To: John Hunt who wrote (9075)11/23/1997 12:03:00 PM
From: Joan Osland Graffius  Read Replies (1) of 18056
 
John, Sorry, I thought it was only in the case the brokerage house had acted inappropriately with my funds or the funds that consitute the wealth of the brokerage house. I realize my stock certificates have to be transfered to me and mutual fund assets will also be transferred in currency. But in the case of mismanagement of a mutual fund the SPIC will pay be more than the fund is worth at current value and will pay me a value relative to what the mismanagement caused.

I looked into this indepth when I became the treasurer of an organization and my research told me that the SPIC coverage was only for mismanagement. For example if I would put the organizations cash into a money market fund backed by stocks and bonds and the manager mismanaged the fund I would get help from the SPIC, but it could be x cents on the $. But on the other hand if I put the organizations money in CD's backed by FDIC banks then I was covered by the $100,000 insurance for each bank I had bought the CD's from. Now if the brokerage house held these CD's in street name the FDIC still pays the insurance. Also if I keep working capital in money market funds backed by the US government instruments these are as safe as the securities backing the fund.

This is what I learned. It could be all wrong.

Joan
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