FAQ: What Is a Worthless Security and What Does a Write‑Off Mean?
From time to time, investors may notice that certain securities in their accounts are marked as having no value. This can raise questions about what exactly happened, whether the shares were sold, and what it means for their investment.
Below, we break down the key concepts behind “worthless securities” and write‑offs, and what they mean for your account.
Updated May 4, 2026
What is a “worthless security”?
A worthless security is a stock or other investment that no longer has any market value. This typically happens when a company goes through events such as bankruptcy, liquidation, or permanent business failure and there is no longer an active market for its shares.
Under FINRA rules, a security is considered worthless when it has no known market value and has been publicly identified as such.
Does “worthless” mean the shares disappeared from my account?
No. Your shares did not disappear or get sold.
When a security is deemed worthless, it means the shares are still yours, but they are assessed as having $0 value. The write‑off is an accounting and reporting action, not a sale.
Why would a broker or clearing firm mark a security as worthless?
Brokers and clearing firms rely on publicly available information—such as exchange notices, issuer announcements, or regulatory actions—to determine when a security has no remaining trading value.
FINRA’s Uniform Practice Code allows securities to be formally treated as worthless once they are publicly disclosed as having no known market value.
What does “write‑off” mean in simple terms?
A write‑off means the investment is removed from active valuation in your account and recorded at $0.
This helps keep your account accurate and prevents confusion from showing a position that can no longer be traded or priced.
Importantly:
- The write‑off does not mean the broker sold your shares
- It does not create cash
- It is not a recovery or reimbursement
How does DriveWealth handle worthless securities?
As part of its standard clearing and account maintenance process, DriveWealth periodically reviews securities across accounts and processes write‑offs for securities that have been deemed worthless based on available market and regulatory information.
These reviews are performed on a recurring basis (typically monthly) to ensure accounts accurately reflect securities that no longer have market value.
This write‑off process is administrative and does not change ownership of the shares
Can a worthless security ever regain value?
In rare cases, corporate actions such as restructurings or legal recoveries may create future value. However, once a security is deemed worthless, there is no expectation of recovery, and trading is typically no longer possible.
If a valid recovery event occurs, brokers rely on official corporate actions or clearing notifications to determine next steps.
Does a worthless security affect my taxes?
Potentially. Under IRS rules, a worthless security is generally treated as if it were sold for $0 on the last day of the year in which it became worthless. This may allow investors to claim a capital loss, depending on individual circumstances.
Inter Securities does not provide tax advice. Investors are encouraged to consult a qualified tax adviser or accountant to understand how a worthless security may affect their personal tax filings.
