Ever wonder what would happen if your brokerage firm went out of business? Brokerage firms are required to segregate customer assets from their own in order to keep them safe. In the majority of cases, customer assets are safely transferred to another brokerage firm.
When a brokerage firm fails and customer assets are missing or have been stolen from their accounts, its the job of the Securities Investor Protection Corporation (SIPC) to step in. SIPC, however, should not be confused with the Federal Deposit Insurance Corporation (FDIC), which offers blanket protection of FDIC-insured bank deposits. As discussed below, SIPC protection is more limited.
What Does SIPC Cover?