...
Dear Jim,
Please find below a notice I received today from Scottrade that I thought might interest you. Unless one opts out, any and all cash balances will automatically be swept into FDIC insured bank accounts at unnamed banks at the broker’s discretion. So if those banks go under, one’s cash position of their brokerage account could possibly be "bailed in" to save an unrelated financial institution unbeknownst to the brokerage customer. I’m sure this happens at other brokerages as well. See note below.
...
Dear Scottrade® Client,
Scottrade is pleased to offer a program that provides up to $500,000 of FDIC insurance protection for your uninvested cash. Our Bank Deposit Program (BDP) transfers available cash in your Scottrade brokerage account and deposits it in one or more FDIC-insured bank accounts. To review the details of the BDP, please review the BDP Terms and Conditions.
What this means for your account: Unless you opt out of the BDP per the instructions below, uninvested cash in your Scottrade account(s) will be automatically deposited, or "swept," into one or more interest-bearing FDIC-insured bank deposit accounts beginning on or after June 14, 2013. When you purchase securities or withdraw funds, the necessary cash will be automatically swept back into your brokerage account. You can easily stay on top of this information through your Scottrade brokerage statements, where balances and activity in the deposit accounts will be reflected. Scottrade Bank, our affiliate, will be one of the banks in this program. Your account will not be charged any fees for the BDP. However, Scottrade does receive a financial benefit in connection with the program which is discussed in detail in Section 8 of the BDP Terms and Conditions.
Your next steps: If you approve of this change, you do not need to take further action. If you choose to not participate in this program, you have two options. You may make this election by logging into your account at Scottrade’s website and visiting the Bank Deposit Program section of the My Account tab, or you may contact your local Scottrade team. You must opt out by June 14, 2013 to avoid being enrolled in this program. If you do not contact us, Scottrade will make the changes detailed in the Terms and Conditions.
Please contact your local Scottrade team with any questions.
Sincerely,
Scottrade, Inc.
...
