Securities Investor Protection Corporation
What Does Securities Investor Protection Corporation Mean?
The Securities Investor Protection Corporation (SIPC) is an organization created by legislative act in 1970 that provides insurance to clients of its brokerage firm members.
Insuranceopedia Explains Securities Investor Protection Corporation
Although it was created by a congressional act, the Securities Investor Protection Corporation is not a government agency. The brokerage firms that make up its membership fund their own operations.
When a member becomes insolvent, the corporation pays the client up to $500,000, with a $250,000 limit for a strictly cash loss. Thus, it works as insurance for people who want to invest in SIPC brokerage firms. Non-US clients are also covered for financial damages.
Bankruptcy and unauthorized trading are the only risks that the SIPC covers. Loss from something else, like bad financial advice from a firm, is not covered.
