SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) – A non-profit corporation created by the Securities Investor Protection Act of 1970 under which investors are partially insured against the possibility of loss resulting from the insolvency of a broker-dealer. In the event of a firm’s insolvency, SIPC appoints a trustee to conclude the affairs of the firm. The trustee typically would return identifiable property (e.g., securities registered in a particular customer’s name) to customers and handle customer claims for other securities or funds due them. SIPC maintains a trust fund for the protection of customers into which broker-dealers make contributions, and SIPC may pay customer claims out of this fund, up to certain specified limits.  Current limits are $500,000.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) – Federal agency that enforces rules applicable to its member banks (other than banks that are members of the Federal Reserve System) and thrift institutions. The FDIC also guarantees (within limits) funds on deposit (other than securities)in member banks and thrift institutions and performs other functions relating to the safety and soundness of its member institutions. Current limits are $250,000.

Last updated on May 14, 2009 by Jack Parsons