SIPC's Role & Responsibilities

The Securities Investor Protection Corporation ("SIPC") is a non-profit corporation created under the Securities Investor Protection Act of 1970. It is funded by its members, securities brokers or dealers registered with the Securities and Exchange Commission ("SEC"). SIPC is governed by seven directors, five appointed by the President of the United States with the advice and consent of the Senate, one by the Secretary of the Treasurer, and one by the Federal Reserve Board.

SIPC protects only the custodial function of an insolvent SIPC-member brokerage firm, by offering limited protection when the member firm is holding cash or securities for an investor but fails financially. SIPC does not guarantee or otherwise provide protection for a loss in the value of the securities that are in the customer’s account, whether the loss in value occurs because of changed business conditions, fraud by the issuer, or any other reason.

The Securities Investor Protection Act does not authorize SIPC to protect investors against the loss of monies invested with offshore banks or other firms that are not SIPC members.

From the time Congress created it in 1970 through December 2011, SIPC has advanced $1.8 billion in order to make possible the recovery of $117.5 billion in assets for an estimated 767,000 investors. Although not every investor is protected by SIPC, SIPC estimates that no less than 99 percent of persons who are eligible have been made whole in the failed brokerage firm cases that it has handled to date.

Rules of the Securities Investor Protection Corporation
Securities Investor Protection Act
SIPC Brochure - How SIPC Protects You