Many people are surprised to learn that their investment losses are not covered by SIPC insurance. SIPC insurance may cover you in specific cases, but it’s important to know exactly what the Securities Investor Protection Corporation (SIPC) does and does not do.
From 1968 to 1970, confidence in the securities market plummeted as many broker-dealers went out of business. To restore faith in the market, in 1970 Congress passed the Securities Investor Protection Act. Against this backdrop, SIPC was formed—as a non-profit membership organization with no regulatory authority.
Spearheaded by its new CEO, Josephine Wang, and funded by the financial services industry itself, SIPC does not rely on taxpayer funds and is not a government agency.