What Is The SIPC And Does It Do Its Job?
People who put their money in banks are protected up to a point by the Federal Deposit Insurance Corporation if their bank goes belly-up. People who put their money in stocks look to the Securities Investor Protection Corporation as a safety net if their broker absconds with their funds or their brokerage firm fails. The little-understood SIPC was created by Congress in 1970. Today, critics are charging that the organization is more interested in protecting itself against claimants than it is in compensating the victims of theft. They also point out that the SIPC has paid out more to lawyers over the years than it has to defrauded investors. • The SIPC is financed by industry and is not backed by the federal government — unlike the FDIC. • The corporation is chartered to protect each investor with securities held at a member brokerage firm for up to $500,000, with claims for cash limited to $100,000. • Rather than being charged with representing theft victims, lawyers assigned to case
