What happens to my stocks if my broker goes bankrupt?

Your shares are yours, not the broker’s. By law, a US broker has to keep customer assets segregated from its own, so if the firm fails, your stocks and cash are not part of its estate. In practice, a failed broker’s customer accounts are transferred to a healthy broker, often within days, and you carry on.

If something has gone wrong and assets are actually missing, which is rare and usually involves fraud, the Securities Investor Protection Corporation steps in. SIPC covers up to $500,000 per customer per account type, including up to $250,000 in cash. Most large brokers also carry additional private insurance above that.

What SIPC does not cover is important: it does not protect you against your investments falling in value. If you bought a stock at $50 and it goes to $10, that is the market, not the broker, and no insurance applies. It also does not cover crypto held at a broker in most cases.

Practically, this is a reason to prefer large, long-established brokers and to keep records of what you own, but it is not a reason to lose sleep. Broker failures where customers actually lost securities are historically very rare.