How does the SIPC work?
The nonprofit SIPC was established by Congress in 1970 and is funded by the brokers themselves, not by taxes. If a brokerage fails, a trustee appointed by a judge will take charge of liquidating the firm and, if possible, moving the accounts to another firm. This trustee will send you a claims form that you must fill out between 30 to 60 days, although it is your responsibility to meet the deadline on the form. This sounds a lot like the FDIC. Is the SIPC the same as the FDIC, but for investments? No. First of all, the FDIC is insurance, while the SIPC is not. Investors are not insured against loss, and all investing involves risk. If a bank goes under, chances are good that you will get your money back via the FDIC. However, the SIPC does not offer blanket coverage, and the return of your money depends on many different factors, such as the results of the SIPC investigation and the value of your stock at the time the bankruptcy was declared. You might not get any money back at all. If
