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A comment on Robinhood, in Need of Cash, Raises $1B from Its Investors. Parent comment

Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by dagw on Friday January 29, 2021 @03:18AM (#25955209)
Yes, it's called SIPC and is (kind of) equivalent to the FDIC for banks. However it only covers up to $500k, only covers cash, stocks, bonds, CDs, and (I think) mutual funds. It does not cover options or future contracts.

Also it will only attempt to return the securities you 'lost' not their cash value. If you lose a lot of money due to not being able to sell your stocks for several days, that is not covered. So if you held 2000 stocks of GME, the SIPC will (eventually) give you back 2000 stocks of GME, not the cash value of those stocks when Robinhood went bankrupt.

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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by cma on Friday January 29, 2021 @03:30AM (#25955271)
It covers less than $500K if SIPC itself fails (after $5 billion in payouts it is insolvent).
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Re:Robinhood, in Need of Cash, Raises $1B from Its Investors by dagw on Friday January 29, 2021 @04:06AM (#25955464)
True, it is still an open question if the government would step in in that case or not. As it stands they have no obligation to do so.
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