Skip to main content
Knopmanmarks
Back to all posts

Securities Investor Protection Corporation (SIPC)

Filed in: Exam Content, Series 24, Series 63, Series 65, Series 66, Series 7, Series 79

The Securities Investor Protection Corporation SIPC(SIPC) is a nonprofit, membership corporation, funded by its member broker-dealers. SIPC protects customers in the event of a broker dealer failure. If a broker dealer fails, and cash or securities are missing from customer accounts SIPC will provides insurance coverage against losses arising from the insolvency of up to $500,000 of the customer’s net equity balance, including up to $250,000 in cash. This coverage is available for each separate customer, which is typically defined by the account title. Thus, a single person may be considered a separate customer if that person held an individual, joint, and retirement account at the same firm. Many firms, however, purchase additional protection above and beyond the SIPC coverage in the event of the firm’s insolvency.

Importantly, SIPC coverage does not extend to losses arising from fraud, misrepresentation, or bad investment decisions.

Knopman Notes:
Candidates for FINRA license exams must be able to accurately identify how separate customers are defined and protected under SIPC. Additionally, candidates should be able to explain to customers what happens to assets above the protection limit: the customer has a general creditor claim against the broker dealer.

Relevant Exams:
Series 7, Series 24, Series 63, Series 65, Series 66, Series 79

Written by Dave Meshkov

Dave's mission (and job: Managing Director of Course Design) is to make FINRA exam training engaging, approachable, and dare he even say, enjoyable. Having trained and coached over ten thousand students to exam success he knows how to present complex subjects in memorable and understandable ways. Prior to joining Knopman Marks in 2011, Dave practiced bankruptcy law at Weil, Gotshal & Manages and served as a law clerk in a the Southern District of New York Bankruptcy Court working on the General Motors and Lehman Brothers bankruptcies. Building on his legal expertise and training allows him to keep all our courses updated with the latest legislative and rule-making changes. Dave currently trains for the Securities Industry Essentials (SIE) exam and the Top-Off Series 6, 7, 24, 57, 63, 65, 66, 79, 86, 87, and 99 exams. He also delivers executive one-on-one training and shares his passion for learning outside of work as a ski instructor and yoga teacher. Dave graduated magna cum laude from Fordham Law School, and cum laude with a BA from the University of Pennsylvania.

Related posts