SIPC stands for Securities Investor Protection Corporation, which is a non-profit corporation that protects customers if their brokerage firm fails. SIPC provides brokerage account insurance up to $500,000 if your assets and cash go missing. Here are some key points to understand about SIPC insurance:
What SIPC protects:
- SIPC protects against the loss of cash and securities held by a customer at a financially-troubled SIPC-member brokerage firm.
- The limit of SIPC protection is $500,000, which includes up to $250,000 protection for cash in your account to buy securities.
- SIPC coverage provides protection in case of unauthorized trading or theft from an account.
What SIPC does not protect:
- SIPC does not protect against the decline in value of your securities.
- SIPC does not protect individuals who are sold worthless stocks and other securities.
- SIPC does not protect against losses due to a brokers bad investment advice, or for recommending inappropriate investments.
- SIPC does not cover investment losses or claims against bad advice.
It is important to note that SIPC protection is not the same as protection for your cash at a Federal Deposit Insurance Corporation (FDIC) insured banking institution because SIPC does not protect the value of any security.
