The MF Global incident is another reminder of what can go wrong with your investment holdings. How can you avoid losing control of your investments?

What happened at MF Global? MF Global had two businesses, they were a broker dealer and a proprietary trading firm. Broker dealers are closely regulated and have strict requirements to protect customer securities they custody. They are required to segregate client securities from other customers' transactions. They cannot be uses as collateral, unless they are held in a margin account. If you are using a margin account, the securities can be pledged as collateral. The broker dealers are also required to maintain reserves to protect against loss. The Securities Investor Protection Corporation (SIPC) also protects customers against loss or missing securities ($500,000) and cash ($250,000). Many broker dealers carry supplemental insurance to extend the SIPC coverage. None of these safeguards protect you against loss of the value of the security in the market; they only protect you against mismanagement.

Trading firms utilize customers'' assets to make investments. Depending upon the firm, they may pledge the assets as collateral to gain leverage. If the investments have gains, they must be segregated to and used only for customer investing, not to fund the firm's operations. It appears that some of these customer funds and securities, which were to be held in reserve, were used to pay MF Globe's company obligations.

What can you do to avoid losing control of your securities?

. Use a broker dealer who is a custodian only. If they are not trading for their own benefit, there is no risk of operating loss. If you don't want someone to trade for you, you don't need the service.

. Make sure your brokerage firm is a member of SIPC. You can check on the amount of supplemental insurance they have if your accounts total more than the SIPC limits.

. Avoid using margin accounts unless you intend to trade on margin.

. Only make deposits directly to FINRA registered firms, not an advisor or registered representative.

. Check your statements monthly to assure that transactions are accurate and your security holdings are correct.