Got Money With Bear Stearns? Here's What To Do

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Stock in Bear Stearns (BSC) is now trading at $5.91, down a whopping 94.55% since the beginning of the year. A victim of the subprime mortgage mess, JP Morgan’s (JPM) $2-a-share bailout announced yesterday will do little to allay the fears of both stockholders and employees alike.

If you were working with a broker at Bear Stearns, the Securities Investor Protection Corporation (SIPC) “guarantees your assets will be there up to $500,000 and what they can recover,” says David Gardner a financial advisor in Boulder, Colo. “For most people, if you have half a million or less there then you will be fine.” Not only is JP Morgan a secure investment bank, but the Federal Reserve is helping secure their deal. “There was more hazard before this deal was announced with JP Morgan and the Fed,” says Gardner. “You saw a lot of hedge funds pulling out assets because they didn’t know that JP Morgan would step in or that the Federal Reserve would extend a loan in order to be able to buy Bear Stearns. What they did was unprecedented. They haven’t done this since the Great Depression.”

With the collapse of Bear Stearns could come a wave of layoffs, which means there’s a chance your broker could be sacrificed. If you want to be safe, “you can request that Bear Stearns hold the stocks and securities in your name and not the street name,” says Gardner, referring to a common term used to describe a transaction your broker makes on your behalf, using their own name on the stock or bond certificate, which ultimately makes trading securities more convenient. “There can be a $50 to $100 charge for doing this, but if you have the securities and stock in your name, it’s harder for it to be taken away from you.” There is more complexity and fees, and it can slow down process of selling shares, but it is more secure.