The FDIC is charged with the responsibility of paying federal
deposit insurance (up to the $250,000 limit) to the depositors of a failed
institution. In many cases, the failed institution’s account records
may not reveal the actual owner(s) of a particular deposit account. Rather,
the records simply indicate that the deposit was placed at the institution
by a depositor broker on behalf of one or more third parties. The FDIC is
required to identify the actual deposit owner(s) and to pay insurance in
an accurate and timely manner.
Immediately after the failure of an insured depository institution, the FDIC
Claims Agent(s) will notify deposit brokers of the institution’s failure.
The notification will explain the procedures whereby the broker may claim insurance
on behalf of the broker’s customers. In some cases, the broker’s
customer may not be an actual owner of the deposit but merely a “second-tier” deposit
broker with his/her own customers. In turn, these customers could be “third-tier” deposit
brokers with their own customers. Assuming the satisfaction of the FDIC’s
disclosure requirements (explained below), the FDIC will require documentation
from each deposit broker in the chain in order to ascertain the actual owner(s)
of the deposit. All such documentation must be submitted to the FDIC through
the “first-tier” broker. You will be responsible for collecting
documentation from any “sub-tier” brokers. You should initiate
this process immediately. The documentation requirements are set forth in Section
The Submission Checklist-Word 58k (Word Help) must accompany your information package. Please
remember to note your firm’s name and broker number, if applicable, on
the diskette/compact disc. Information about the input file for the
diskette/compact disc is in
Section V, Broker Input File Requirements.
Also, you should notify any “sub-tier” brokers that any “trading” on
a particular deposit (i.e., transfer of ownership interests) must cease. Deposit
insurance is paid on the basis of the ownership of a deposit as of the date
of the insured depository institution’s failure.