
SIPC insures money “intended to buy securities”. How is intent determined? - alopecoid
There is a lot of scrutiny regarding Robinhood&#x27;s attempt to use SIPC to insure money in their proposed checking&#x2F;savings account offering, which they are now rebranding as a cash management account. This seems to have struck a particular nerve for the &quot;traditional&quot; (non &quot;fintech&quot;) folk.<p>But why? The argument that I keep reading is that SIPC is meant only to insure money &quot;intended to buy securities&quot; (see full quote and source below). But that seems entirely vague, to the point where I&#x27;m somewhat encouraged that Robinhood attempted to exploit the vagueness to pass on better rates to customers. I&#x27;m more inclined to be upset that someone else gets to decide what my &quot;intent&quot; is when I have money parked somewhere and, based on that decision, gets to dictate whether or not my money is insured.<p>Thoughts? Insights? Thanks!<p>Full quote and source:<p>&quot;Brokerage cash management accounts are meant to hold cash until it can be invested in securities, and aren&#x27;t intended strictly for savings, Harbeck said. Money sitting in such accounts but not intended to buy securities may not be covered by the SIPC, which insures accounts for up to $250,000 of cash in the case of a broker&#x27;s failure.&quot;<p>https:&#x2F;&#x2F;www.cnbc.com&#x2F;2018&#x2F;12&#x2F;20&#x2F;senators-call-on-sec-and-other-financial-watchdogs-to-look-into-fintech-regulation-after-robinhood-debacle.html
======
masterjack
Regardless of intent, SIPC has around $3 Billion saved up to protect all
brokerage accounts in the US. They literally cannot afford to insure Robinhood
if they wanted.

