SIPC Rules

Here is some good information for SIPC for the series 6, series 7, series 24, series 26, series 65, and series 66 exams

Customer Coverage

SIPC protects customers of a brokerage firm in much the same way that the FDIC protects customers of banks. SIPC covers customer losses that result from broker dealer failure, not for market losses. SIPC covers customers for up to $500,000 per separate customer. Of the $500,000, up to $100,000 may be in cash. Most broker dealers carry additional private insurance to cover larger accounts, but SIPC is the industry-funded insurance and is required by all broker dealers. The following are examples of separate customers:

Customer
Securities Market Value
Cash
SIPC Coverage

Mr. Jones
$320,000
$75,000
All
Mr. & Mrs. Jones
$290,000
$90,000
All
Mrs. Jones
$397,000
$82,000
All


All of the accounts shown would be considered separate customers and SIPC would cover the entire value of all of the accounts. If an account has in excess of $100,000 in cash, the individual would not be covered for any amount exceeding $100,000 in cash and would become a general creditor for the rest. SIPC does not consider a margin account and cash account as separate customers and the customer would be covered for the maximum of $ 500,000. SIPC does not offer coverage for commodities contracts and all member firms must display the SIPC sign in the lobby of the firm.

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