Fraud Guarantee by Brokerages

Prompted by the case of a JP Morgan customer Dave DeSmidt who lost his 25 years savings in this lifetime retirement funds ($179k) — “In an instant, retirement savings vanish“, there has been various discussions of fraud guarantees offered by some of the brokerages. Apparently,

while credit card and online banking accounts are legally protected in the event of fraud, DeSmidt’s brokerage account came with no such insurance. Two months after the theft, his balance still read $0.

One such related discussion is conversation 56193.

Brokerages that currently provide fraud guarantee are

  • Fidelity (link)
  • Ameritrade
  • Etrade
  • Schwab

Vanguard currently DOES NOT provide fraud guarantee. It appears that unlike the brokerages listed above, if a thief were to steal your money from Vanguard, Vanguard has no obligation to compensate you.

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