The Securities Investor Protection Corporation (hereinafter “SIPC”) insures investment accounts in the event of the failure of a brokerage firm that is covered by SIPC (the “covered brokerage firm”). Under SIPC, brokerage accounts in a covered brokerage firm are insured up to $500,000 per account. This may include $100,000 held in the account as cash. When a covered brokerage firm is closed due to bankruptcy or other reasons and investor cash or securities are missing, the SIPC insures these assets up to the $500,000 insurance limit per covered account.
SIPC does not insure losses that occur as a part of regular stock market activity or the bankruptcy or failure of any of the companies in which you have an investment. It also does not insure bad investments or investments made at the behest of your broker in worthless stocks, such as “penny stocks,” bonds or other assets. In general, SIPC covers stocks, bonds, mutual funds, notes, and other investment company shares, and other registered securities which are held in your covered account at a covered brokerage firm. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options. If such instruments were held in a covered account in a covered brokerage firm, and if these instruments are “missing,” SIPC insurance may not be used to pay for these assets.