What is the SIPC? Securities Investor Protection Corporation

Jan 18, 2024

Financial planning

What is the SIPC
What is the SIPC

The Securities Investor Protection Corporation (SIPC) is a nonprofit membership organization that insures customer accounts if brokerage firms fail. It’s a central part of how investors are protected in the US.


How does SIPC coverage work?


SIPC protects investor accounts by up to $500,000 in securities for each failing broker, including a $250,000 cash limit per account. If a broker liquidates, SIPC transfers or sells its accounts’ assets to substitute firms. And typically refunds investors within months. This prevents holdings and cash from disappearing if companies abruptly close down.


To date, the SIPC has helped recover $141.8 billion in assets for an estimated 773,000 investors. This includes $105.7 billion recovered and distributed for more than 111,000 former Lehman Brothers customers as well as helping Madoff ponzi scheme victims recover more than $13 billion. 


You can also think of SIPC insurance for investment accounts as the equivalent of FDIC insurance for bank accounts. They operate differently, but their purposes are the same–to keep your money safe.


What is not covered by SIPC insurance?


It’s also important to know what SIPC doesn't cover. It doesn't protect your investments if the broker dealer isn't part of SIPC. Nor does it shield you from market losses or promises of how well an investment will do. 


This is because losses in the ever-changing world of investing are normal. If a company goes out of business, however, SIPC steps in to replace missing stocks and securities if possible.


SIPC also doesn't protect commodity futures contracts, foreign exchange trades, fixed annuity contracts, or certain investment contracts that are not registered with the U.S. Securities and Exchange Commission. If you hold cash linked to commodity or currency trades, SIPC won't cover that either. 

Why is SIPC’s mission important?


SIPC’s mission is important because even diligent brokers can fail, especially during financial crises. Without this type of insurance coverage, investors would be at risk of losing all the money and investments in their accounts if their broker suddenly went out of business. 


Thankfully, SIPC helps eliminate this type of worst-case scenario through insured payouts if a member brokerage shuts down. And this in turn preserves market confidence.


Who are the members of SIPC?


Over 3,500 brokerage firms are SIPC members including Plenty’s brokerage services provider Atomic Brokerage LLC and our clearing and custody services provider BNY Mellon / Pershing.


Other SIPC members you may recognize include Charles Schwab, Fidelity, and Morgan Stanley. You can also check SIPC’s online member list anytime to see which brokerages offer investor protection.

Is SIPC membership required?


Yes, today all registered broker-dealers are required to be members of SIPC with only a few exceptions. 


SIPC members are charged an assessment rate, which is currently 0.0015 of Net Operating Revenues (as of December 2023). Think of these assessments as membership dues, which are then used to fund SIPC’s protection reserves and its mission.


SIPC’s history and why it matters


The SIPC has a long history and has been around for over 50 years. It was created under a federal law known as the Securities Investor Protection Act in 1970. It’s not actually a part of the US government though, nor does the SIPC have any control over how its members are regulated.


The main reason why SIPC was formed is because a large number of brokers collapsed between 1968-1970. Hundreds of broker-dealers were acquired, merged, or went bankrupt because of a significant “paperwork crunch.” 


Why did this happen? During this time period, there was way more trading volume than most brokers could handle operationally. Without enough bandwidth to process and settle so much trading activity, many trades were not completed properly and failed. These errors ended up being quite costly and caused many brokerages to go out of business. Needless to say, countless investors lost a lot of money too.


Congress needed a way to restore the public’s confidence in the US securities markets. So the SIPC was formed as a way to protect investors from any other broker-dealer collapses going forward. 


Recent policy changes by the SIPC

In response to recent major broker failures like Lehman Brothers, SIPC strengthened its coverage and responsiveness–now processing claims faster while expanding protections for more asset types. 


This modernization and larger umbrella preserves market faith and helps SIPC to better address future crises or instability.

The SIPC Is There For The Investor


To recap, SIPC insurance protects investors from company risks beyond their individual control such as broker-dealer collapse, like how FDIC insurance protects depositors from bank collapse. 


It acts as a safety net to ensure that investors are protected from worst-case scenarios and helps maintain consumer confidence in the securities markets.


Thanks for learning about SIPC with us today. Here at Plenty, we’re excited to bring you all the tools you need to plan, invest, and track your savings. We help you achieve your goals as quickly and easily as possible so you’ll be ready for anything life has in store. 


Ready to get started? Sign up for an account with Plenty today.


-Team Plenty


This information is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only. An investment in a fund entails a high degree of risk, including the risk of loss. There is no assurance that a Fund’s investment objective will be achieved or that investors will receive a return on their capital.



Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.