What is the SIPC?
The Securities Investor Protection Corporation (SIPC) is an organization that compensates investors if the firms handling their funds and securities go bankrupt. If an SIPC member goes bankrupt, the SIPC steps in, liquidates the firm’s assets and compensates investors for up to $500,000 US (USD), limited to $100,000 US (USD) in cash. The SIPC claims that it has successfully restored assets to 99% of investors who were eligible for SIPC protection. The SIPC covers cash and securities such as stocks and bonds which are held by a brokerage firm. If the firm experiences financial trouble and these assets go missing, the SIPC will make every effort to recover them, usually by liquidating the troubled firm with the assistance of a trustee who is appointed by a federal court. The SIPC does not cover currencies, commodity futures contracts, investment contracts, or fixed annuity contracts which have not been registered with the United States Securities and Exchange Commission. The SIPC is ofte
The Securities Investor Protection Corporation was originally created in 1970 by the Congress to protect investor interests. The SIPC is not a Government agency or a regulator; it’s a nonprofit membership corporation that is funded by its member securities brokers. What Does SIPC Insurance Cover? SIPC is not an investor version of the FDIC, which automatically covers your bank account up to a certain dollar limit. If your broker fails, most (if not all) your securities (stocks, bonds, mutual funds, etc.) will be returned to you. After the broker’s customer assets have been distributed, SIPC steps in to replace only securities and cash that are missing from your account. SIPC covers any missing assets up to a limit of $500,000 per account type, of which $100,000 may be claims for cash. In regard to money-market funds, if your statement lists these assets as shares with a value of $1, such as Schwab’s Value Advantage, they are viewed as mutual funds and qualify for the full $5,00,000 cov
