SIPC protects customers of a failed member brokerage firm, restoring missing cash and securities up to $500,000, including up to $250,000 in cash.
SIPC is a non-government organization. If a member brokerage firm goes out of business and can't return what customers hold, a court-appointed trustee works through claims and SIPC covers missing assets up to those limits. It protects most securities, such as stocks, bonds and mutual funds.
It does not protect you against investments falling in value, and it doesn't cover investment contracts not registered with the SEC. It only covers customers of member firms.
Investment advisers aren't SIPC members; the brokerage firm that holds your account as custodian is the one that needs to be.
How to check
Check that the custodian holding your account, and its clearing firm, appear in SIPC's membership database. Firms are required by law to tell you if they aren't members.
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