SIPC and the Securities Investor Protection Act (SIPA)
Chapters in this video
- 0:00 The doomsday scenario: when the firm fails and assets vanish
- 1:12 SIPC vs FDIC: non-profit corporation, not federal agency
- 2:15 The $500K limit and $250K cash sub-limit math trap
- 3:42 Separate capacities multiply coverage
- 4:57 What SIPC covers: disappearance, not market losses
- 5:35 What SIPC excludes: futures, forex, annuities, and more
- 6:04 Federal court trustee workflow and prohibited acts
- 7:28 Excess SIPC: private insurance on top of statutory coverage
- 7:53 Rapid-fire exam recap
What this video covers
- Why SIPC is a non-profit member-funded corporation, not a federal agency like the Federal Deposit Insurance Corporation (FDIC), and what that distinction means on test day
- How the $500,000 total coverage and $250,000 cash sub-limit interact when a customer holds both securities and cash
- Why separate capacities (individual, joint, IRA, trust, custodial) each get a fresh $500,000/ $250,000 limit at the same firm
- What SIPC covers: the disappearance of customer securities and cash on firm failure, not market losses
- Key exclusions from SIPC coverage: commodity futures, foreign exchange, fixed annuities, unregistered investment contracts, and fully-paid securities on loan
- The federal court trustee liquidation workflow, and why SIPC applies to the court but does not appoint the trustee
- What excess SIPC is: private insurance layered on top of statutory SIPC, not an extension of SIPC itself
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