Frequently Asked Questions
Q: In the event Commonwealth fails, are my funds at risk?
A: No. As a fully introducing broker/dealer to NFS, Commonwealth does not have custody of client funds or securities.
Q: In the event NFS fails, do general creditors share in the distribution of cash and securities of all client assets on hand?
A: No. Clients receive a preferential distribution of cash and securities equal in value to their pro rata share of all client assets on hand, in which general creditors do not share.
Q: What is the limit of SIPC coverage?
A: SIPC coverage is limited to $500,000 per customer, including $250,000 for cash.
Q: Is the $500,000 SIPC coverage for each account a customer has at NFS or for all the customer’s accounts?
A: The limit is $500,000 per person, per account type. For example, if an individual customer had two individual accounts in his name, those accounts would be combined for SIPC purposes and his total SIPC coverage would be $500,000. If a customer and his spouse each had individual accounts, individual IRAs, 401(k) plan accounts, and a joint account, however, each account would be eligible for $500,000 of SIPC coverage.
Q: Are margin accounts treated differently from other accounts?
A: No. You will receive your pro rata share of the net equity value of your account.
Q: Are money market funds treated as securities or cash?
A: Money market funds are treated as securities and fall within the $500,000 securities maximum.
Q: If I am not fully reimbursed from my pro rata share and my SIPC payment, is there any other source to make me whole?
A. Yes. To cover this exact possibility, NFS has arranged for additional protection beyond SIPC that covers both cash and covered securities.
Q: Is there any exclusion to what SIPC covers?
A: Yes. SIPC does not cover commodity futures contracts, fixed annuity contracts, and currency, nor does it cover investment contracts such as limited partnerships.
Q: If NFS goes under, how quickly will I get my investments back?
A: Historically, customers have received their property and payments within one to three months.