You have a trading account with Pump N Dumpsters Securities LLC. You have $500,000.00 in Securities and $500,000.00 worth of cash with them. Pump N Dumpsters is a registered Broker-Dealer with the SEC and has SIPC insurance coverage. Due to fraud and mismanagement this broker dealer declares Bankruptcy. SIPC Insurance will not cover all of your holdings.

A) What type of risk do you have with respect to this Broker Dealer? 

B) What could you have done earlier to reduce or even prevent this risk from adversely effecting your holdings ?

Answer rating: 100% (QA)

A Type of Risk The primary risk in this scenario is Counterparty Risk or BrokerDealer Risk This risk arises from the potential financial instability f... View the full answer