If Double goes out of business, your assets are safe and held in your name at Apex Clearing. They have processes in place for these scenarios to help you access and transfer those assets.
SIPC protection covers against a brokerage firm failing, which in our case is Apex Clearing. We are not currently a brokerage so SIPC would not apply if Double goes bankrupt.
> SIPC protection covers against a brokerage firm failing, which in our case is Apex Clearing. We are not currently a brokerage so SIPC would not apply if Double goes bankrupt.
I thank you for being upfront and honest about this. The tough spot you'll find yourself in, then, is that if any money goes missing between you and Apex, customers are completely SOL. This is not a theoretical risk, this is exactly what happened in the Yotta/Synapse fiasco. Even if I trust that you guys are much better technologists than Synapse, would I be willing to take that risk for a teeny, teeny reduction in fees compared to an index ETF? Sorry, not for me.
EDIT: Wanted to put an edit up here so that it doesn't get lost. Thanks for your response below - for me, that was the critical information I needed, that I can directly verify that my SIPC-insured funds are held by the SIPC-insured entity. That was indeed not the case with Yotta/Synapse (and, indeed, most fintechs who keep customer funds in an FBO account at a partner bank), so I really appreciate the clarification. FWIW, I think it might be worth it to add a small blurb in the "SIPC Insured" section saying that your insured funds can be verified at any time.
Kudos, you guys have thought through a good deal of the important details, and sufficiently assuaged my concerns.
Yotta does not hold any funds themselves. You connect your bank and ach/wire money into an Evolve bank account.
The problem is that unbeknownst to users, Evolve had no record of what belonged to which user—it all came via Synapse on behalf of Yotta. And when Synapse went bankrupt, everyone pointed fingers about where the money is and who it belongs to.
OTOH, some users seem able to talk to Apex about their shares that had been via an "app", and are still frustrated… with Apex:
> My own personal experience with Apex - I transferred measly GME positions out of Stash app (Apex) to Fidelity in June. My Apex/Stash account is still locked from this transfer. My CS requests have been escalated to the broker (Apex) repeatedly. Finally today, Apex confirmed they will unlock my account in 4 business days. That’s 34-36 calendar days after share transfer. All this DD is much smarter than me, but even in little ways these big explanations offer a simple reason for these shenanigans. I have NEVER had my account locked for share transfer past the confirmed transfer date for any other position. They had the gall to tell me today that they needed to speak with Fidelity directly to confirm receipt and Fidelity “received” my shares 3 weeks ago, which was 3 weeks after I initiated it. Why all the runaround?
Will reply directly to your comment, as I started the concern in this thread, and I think it's important to point out that the situation is materially different based on what jjmaxwell4 has responded.
With Evolve, money was just pooled into an "FBO" ("for benefit of") account, and not ledgered directly to individual users. This is apparently not the case with Apex since you can verify your balance with them directly. They report your balance, so if any money goes missing, you should have an insurable case with them directly.
Yep. The bank has to require reconciliation of the accounts that are active in the FBO. Oddly enough, there is zero standardization in banking regulations and recon is an afterthought and rarely done. Doubly so if you are talking B2B.
Reconciliation costs a lot of money. They typically just watch the balance and and bark at the fintech for more money when it runs out. There are people at every bank calling partners every day demanding wires for overdrawn FBO accounts. Buyer beware.
>> If Double goes out of business, your assets are safe and held in your name at Apex Clearing. They have processes in place for these scenarios to help you access and transfer those assets.
>> SIPC protection covers against a brokerage firm failing, which in our case is Apex Clearing. We are not currently a brokerage so SIPC would not apply if Double goes bankrupt.
Dear @jjmaxwell4 -- I'm not really worried about your service given you're a layer atop Apex, however, this is a very common conversation happening right now on many forums -- could you clarify a bit more, how one would "get comfortable" with a new product?
I'm assuming the list is something like this, but that is an non-expert guess:
- Is the institution i'm interacting with regulated (in your case, Yes, Double is regulated by The SEC)
- Who holds my funds, and are they regulated (in your case, the funds are held by Apex Clearing, and if I understand correctly, Apex is a broker dealer regulated by The SEC)
- Are the funds held in my name or pooled in with other money? (in your case, I think the funds are held by Apex only in my name)
I think one of the problems with the Yotta/Synapse/Evolve collapse is -- its unclear how one even evaluates their level of risk.
It is also unclear how one validates SIPC coverage, like could I go to SIPC and enter an account number and validate the funds are actually covered somewhere across the layers?
Would be great for someone who knows this area to comment.
You can sign up directly with Apex (completely separate login) and view your holdings in your name in their web portal, along with all documents that Double sends you on your account activity. The process requires a bit of verification so I've written up a help article here on how to get set up: https://help.double.finance/en/articles/10262406-how-can-i-v...
Just wanted to comment and say that I'm happy you / Apex offer this. My concern (similar to others in this thread) is that Double might say they are depositing the money into Apex, but it's possible they actually are not, and being able to verify this myself is crucial.
"Apex provides these same clearing services to many other introducing brokers, including Ally Invest, Betterment Securities, M1 Finance, Marcus by Goldman Sachs & Co., SoFi Securities, Stash Capital, Tastyworks Inc., TradeZero America Inc, and hundreds more"
SIPC protection covers against a brokerage firm failing, which in our case is Apex Clearing. We are not currently a brokerage so SIPC would not apply if Double goes bankrupt.