Is Dough Safe and Insured?

Have you been thinking about opening a brokerage account with the new player in the industry Dough? Do you have concerns about this small investment firm? We did some research on this company, and here are the findings:

Dough Memberships with FINRA and the SEC

Dough is a member of America’s major securities regulator, the Financial Industry Regulatory Authority, better known as FINRA. Dough’s membership number is 148243. Using its ID number at BrokerCheck, we found a profile with zero disclosures, an excellent history. However, Dough has been registered only since 2009, which is not a lot of history. Also, Dough hasn’t had a lot of clients during its tenure, which is another explanation for its very low complaint level.

Also on BrokerCheck we found that tastytrade is a part owner of Dough. Like tasty, Dough is headquartered in Chicago. It was established in Delaware in 2008. Although the broker-dealer does not list its phone number on its website, it is displayed on its BrokerCheck profile. It’s (312) 380-9402. tastytrade also owns a much more established and higher rated brokerage firm called tastyworks - read tastyworks Review.

Dough is also registered with the Securities and Exchange Commission, another heavy hitter in the regulator category. Dough’s SEC ID number is 8-67992. The firm is registered as a broker-dealer in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Dough is not registered as an investment advisor.

Membership in FINRA and the SEC means that Dough’s activities are watched and regulated. If Dough engages in any unlawful or unethical behaviors, these 2 watchdogs are supposed to intervene and do something. They haven’t always succeeded, but usually they do.

Both FINRA and the SEC have the power to enact sanctions against Dough if it does anything wrong. FINRA has review boards where Dough can plead its innocence. If it fails, it will have to pay fines. This possibility is usually enough to keep broker-dealers in line. The SEC has the power to pursue criminal charges in really severe cases.


Dough SIPC Insurance

Besides the government-imposed regulation, Dough also offers brokerage insurance through America’s primary investment insurer: SIPC. This organization provides $500,000 worth of protection to every customer of every brokerage firm that’s a member. Thus, it’s possible to have more than $500,000 of insurance by opening accounts with multiple firms. Half of the $500,000 maximum can be applied to cash balances.

It’s important to note that SIPC does not protect against market loss. It only guarantees number of shares up to market price, whatever that is. For instance, let’s say you own 100 shares of General Motors. SIPC guarantees those shares in case they go missing in your brokerage account. SIPC does not guarantee the price of GM.


Is Dough Trading Safe


Supplemental Insurance

Some brokerage houses purchase additional insurance to cover balances above $500,000. Known as “excess SIPC,” this coverage is available at firms like Fidelity and Vanguard. Dough does not have any supplemental insurance.


Technology

Dough uses 256-bit encryption to keep accounts as safe as possible. It does not have a website login. It only uses a mobile platform.


Tastytrade

Tastytrade has a rating of A+ from the Better Business Bureau. It has been in business for five years and has zero complaints on its BBB profile.


is Dough Safe Judgement

Dough is definitely insured, and it appears to be relatively safe. No brokerage firm is completely safe because the financial markets are always unpredictable. It’s possible to lose 100% of your investment with any broker if the value of your securities or other assets drops to $0.

We would like to see Dough acquire excess SIPC coverage. We also will be keeping an eye on Dough’s BrokerCheck page to see if any disclosures come in.


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