What is SIPC insurance coverage?
Security Investors Protection Corporation, or SIPC, insures investors’ accounts from losses due to the failure or illegal activities of an investment brokerage or mutual fund company that causes that company to go bankrupt.FunctionSIPC is similar to the Federal Deposit Insurance Corporation (FDIC), which insures people for up to $250,000 per depositor per bank when a bank fails, but investment accounts are each insured by the SIPC for up to $500,000.Additional ProtectionSIPC also insures the investor for up to $100,000 for money that may be sitting in their brokerage account, but has not yet been invested.What’s Not Covered?You are not insured if, for example, your investment in the XYZ Widget Company goes sour. That’s considered a bad investment.SolutionSIPC works through the courts, or with court-appointed trustees, to isolate and recover the maximum amount of funds from the bankrupt firm’s remaining assets and make an equitable distribution of those funds to investors.WarningAsk you
