SEC Rule 15c3-3 - The Customer Protection Rule

Securities Investor Protection Act of 1970

The Securities Investor Protection Act of 1970 (SIPA) created the Securities Investor Protection Corporation (SIPC). SIPC is a non-profit membership corporation, funded by its member securities broker-dealers. It either acts as trustee or works with independent court-appointed trustees.

SIPC's Board of Directors consist of seven persons as follows:

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered. All other so-called "street name" securities are distributed on a pro-rate basis. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. Recovered funds are used to pay investors whose claims exceed SIPC's protection limit of $500,000.

According to SIPC under liquidations administered by it:

  1. 99 percent of eligible investors get their investments back 
  2. in its thirty year history, SIPC has advanced $391 million in order to make possible the recovery of $3.8 billion in assets for an estimated 443,000 investors.