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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Fidelity Bond

Definition:

A fidelity bond is not a type of investment bond. Instead, it's a type of business insurance (and it would've been a lot simpler to remember if people called it "fidelity insurance"—just saying). Brokerages and insurance companies carry this type of insurance, which protects them in case one of their employees does something shady. If a broker engages in fraud, for example, or steals a bunch of client money, this type of insurance will protect the brokerage.