From: "hotpprs" 
Newsgroups: misc.invest.financial-plan
Subject: Is it safe to have cash in a brokerage account?
Date: Fri, 7 Jul 2006 18:40:38 -0500
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While I am waiting for the upcoming recession to come and go, I have
most of my money in cash in my stock brokerage account. I guess most
brokerage accounts are SIPC insured for way more then the typical
investor like myself has in the account, but I am perplexed by a
disclaimer at the end of the explanation of the SIPC coverage, as
follows:

" * In order for cash to be covered by SIPC, cash held in an account
must be the for the purpose of, or as a result of, securities
transactions. Cash held in a securities account for the purpose of
earning interest, which was not the result of a securities transaction,
may not be covered by SIPC. "

How would you determine if cash sitting in a brokerage account is
intended for security transactions or for earning interest? I may
invest that cash again, and I may not. I may get hit by a meteor before
that ever happens, who knows? But I am worried that this is a loophole
in the insurance coverage by the SIPC. Is this the case? Does anyone
know of any precedents on this subject, such as a brokerage firm that
went belly up?