What coverage does the Securities Investor Protection Corporation (SIPC) provide? Has the cash coverage been raised from $40,000 to $100,000 to be comparable to FDIC protection for bank deposits? -- Anon.
SIPC protects investors from a loss in case a broker who holds a client's stock or cash in street name goes bankrupt or fails and is unable to pay accounts. Protection is in two parts: for cash held by a broker in an account for any of several reasons; and an additional amount for securities. Brokers often keep stock in safekeeping for clients or in street name for the beneficial interest of clients. Limits were $40,000 for cash and $100,000 for cash plus securities. Congress passed legislation and President Carter signed the bill in mid-October to increase the limits to $100,000 and $500,000.