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Securities Investor Protection Corporation (SIPC)
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Securities Investor Protection Corporation (SIPC)

by FORORYMay 7, 2017
Overview
Abbreviation

SIPC

Website

http://www.sipc.org/

Securities Investor Protection Corporation (SIPC)

The Securities Investor Protection Corporation (SIPC) is a federally mandated, non-profit, member-funded, United States corporation created under the Securities Investor Protection Act (SIPA) of 1970 and mandates membership of most US-registered broker-dealers. It is not a Self-regulatory organization (SRO). “The SIPC fund, which constitutes an insurance program, is designed to protect the customers of brokers or dealers subject to the SIPA from loss in case of financial failure of the member. The fund is supported by assessments upon its members. If the fund should become inadequate, the SIPA authorizes borrowing against the U.S. Treasury. An analogy could be made to the role of the Federal Deposit Insurance Corporation (FDIC) in the banking industry.”

SIPC is required to report to, and be overseen by, the Securities and Exchange Commission. “Pursuant to SIPA, the Commission also has delegated authority to conduct inspections of SIPC, review SIPC annual reports, and approve SIPC’s bylaws, rules, and any amendments to the bylaws and rules.” As the SIPC states on its website, “Though created by the Securities Investor Protection Act (15 U.S.C. § 78aaa et seq., as amended), SIPC is neither a government agency nor a regulatory authority. It is a nonprofit, membership corporation, funded by its member securities broker-dealers.”

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