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News > Companies
Brokers reassure clients
September 12, 2001: 3:20 p.m. ET

SIPC reiterates investor insurance; brokers say assets are safe
By Staff Writer Andrew Stein
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NEW YORK (CNNfn) - In the wake of the destruction and significant loss of life from the attacks on New York's World Trade Center, several financial firms released statements Wednesday assuring investors that assets were secure despite the damage and detailing their plans for resuming operations.

Computer networks containing vast amounts of financial information and offices housing thousands of employees were lost in the attacks. The question remains how, and if, companies will be able to retrieve the information and where the thousands of displaced employees will report to work.

Discount broker Charles Schwab said all of its systems and operations are functioning normally, but did remind clients that the company provides protection insurance up to $500,000, of which $100,000 is in cash. Insurance policies are standard throughout the industry.

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Indeed, most firms are posting statements assuring investors that assets are safe. The chief executive of Ameritrade, Joe Moglia, said "We have taken every precaution to safeguard our associates and the assets of our clients. Please rest assured that your financial assets with Ameritrade are safe."

Merrill Lynch asked all brokers to call clients and assure them that assets are safe, systems are operational, and they can continue to write checks from money market accounts.

Back to work

Fred Alger Management was one of the firms hit hardest by Tuesday's attacks. The asset management company was based in one of the World Trade towers and said 38 employees, including its chief executive, still remain missing.

The firm's chairman, Fred Alger, will assume the chief executive role. He  said the company will "spare no expense in aggressively rebuilding this firm" and plans to move its headquarters to Morristown, N.J.

Merrill Lynch said it evacuated 9,000 employees from offices in downtown Manhattan after the attacks Tuesday. The company said it is "taking it day by day and will wait until the World Financial Center is completely safe" before making decisions about displaced employees, according to Merrill spokesman Rich Silverstein.

The collapse of the WTC towers considerably damaged buildings in the World Financial Center, causing broken windows, flooding, and possible structural problems.

SIPC reiterates insurance protection

Many of the companies affected by the attack have backup systems in alternate locations, according to Ken Caputo, associate general council with Securities Investor Protection Corporation. "The question becomes what kind of backup systems companies have. We are talking to the Securities and Exchange Commission to ascertain that information," he said.

"Just because a system was lost, that doesn't mean the stock has been burned or lost," Caputo said.

Investors should sit tight

He said most investors and brokerages don't hold actual stock certificates, and most are held in the Depository Trust & Clearing Corp., which is located at 55 Water St., close to the World Trade Center but out of the damage zone.

For those companies that did not have backup systems, Caputo said the SIPC will contact the clients from various companies in an effort to use statements to establish a paper trail. In the worst case scenario, Caputo says the SIPC is permitted by law to liquidate a firm with lost records, a route the agency only takes with cases of fraud or financial instability. Assets within a liquidated firm are covered by the SIPC.

Back to trading

Most brokers are releasing guidelines for the trades that were placed Tuesday and for ensuing trading when the markets reopen.

Charles Schwab canceled all option and equity trades placed before 11 a.m. ET Tuesday. Those that were placed after 11 a.m. ET will be executed on the next open market date. 

Call centers with Charles Schwab and TD Waterhouse remained open Wednesday, and TD Waterhouse said it will accept trades and execute them when trading resumes.

However, Charles Schwab, chairman and chief executive of the securities firm, told clients in a recorded message to expect a rocky opening when trading resumes. "There may be short-term volatility as people react to the news of the day."

Schwab suggested clients initially use limit orders or stop orders to cut exposure to large swings when trading resumes. "We advise you to act prudently," he said.  graphic

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.