THE ROLE OF SIPC
SIPC is the first line of defense in the event a brokerage firm fails owing customers cash and securities that are missing from customer accounts. Although not every investor is protected by SIPC, no fewer than 99 percent of persons who are eligible get their investments back from SIPC. From its creation by Congress in 1970 through December 2009, SIPC advanced $1.2 billion in order to make possible the recovery of $108.0 billion in assets for an estimated 763,000 investors.

When a brokerage is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers’ cash, stock and other securities, and other customer property. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever…or wait for years while their assets are tied up in court.

However, because not everyone, and not every loss, is protected by SIPC, you are urged to read this whole brochure carefully to learn about the limits of protection.

WHAT SIPC COVERS… and what it does not
SIPC is not the FDIC. The Securities Investor Protection Corporation does not offer to investors the same blanket protection that the Federal Deposit Insurance Corporation provides to bank depositors.

How are SIPC and the FDIC different? When a member bank fails, the FDIC insures all depositors at that institution against loss up to a certain dollar limit. The FDIC’s no-questions-asked approach makes sense because the banking world is “risk averse.” Most savers put their money in FDIC-insured bank accounts because they can’t afford to lose their money.

That is precisely the opposite of how investors behave in the stock market, in which rewards are only possible with risk.

Most market losses are a normal part of the ups and downs of the risk-oriented world of investing. That is why SIPC does not bail out investors when the value of their stocks, bonds and other investments falls for any reason. Instead, SIPC replaces missing stocks and other securities where it is possible to do so...even when investments have increased in value.

SIPC does not cover individuals who are sold worthless stocks and other securities. SIPC helps individuals whose money, stocks and other securities are stolen by a broker or put at risk when a brokerage fails for other reasons. ...

Read Full: How SIPC Protects You

PDF format, 218KB.

AVOIDING INVESTMENT FRAUD
Learn about investment fraud…and where to turn for help.

SIPC urges all investors to understand the dangers of investment fraud and where to turn for help if swindled. That is why SIPC works with regulatory and self-regulatory agencies, consumer groups, and other concerned parties to increase investor awareness about scams.

Check out the investment fraud warnings on the following Web sites:
U.S. Securities and Exchange Commission
www.sec.gov
www.investor.gov
FINRA (Financial Industry Regulatory Authority)
www.finra.org
National Fraud Information Center
www.fraud.org
Investor Protection Trust
www.investorprotection.org
Alliance for Investor Education
www.investoreducation.org
Your state securities agency
See the “Contact Your Regulator” page at www.nasaa.org
Securities Industry and Financial Markets Association
www.sifma.org
Canadian Investor Protection Fund
www.cipf.ca

You can find a list of the best investment fraud education resources on the Web by visiting SIPC on the Web at www.sipc.org, and see “Protecting Yourself Against Fraud”

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