Tax & regulation
What is SIPC insurance protection and what are its limits if my stock broker goes bankrupt?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
SIPC insurance protects customers of failed brokerage firms by covering missing securities and cash up to $500,000 per customer, including a $250,000 limit specifically for cash claims.
How it works
SIPC coverage protects against brokerage firm failure and does not cover investment losses due to market decline or fraud unrelated to the firm's insolvency.
An example
If a brokerage fails and a customer's $400,000 in securities cannot be located, SIPC coverage is designed to help restore those missing assets up to the applicable limit.
Risk & limitations
SIPC does not insure against losses from poor investment decisions or market volatility; coverage limits and exclusions should be reviewed directly through SIPC resources. This describes U.S. federal rules only; Canadian and other non-U.S. investors are subject to different tax/regulatory regimes (e.g., CRA rules, TFSA/RRSP treatment) and should consult a local tax professional.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.