Securities Investor Protection Corporation (SIPC)

We here at StateTrust Investments, Inc. know how important it is that you feel secure in the knowledge that your assets are safe. To that end, we are a registered member of the Securities Investor Protection Corporation (the SIPC).

The SIPC was created by the United States Congress in 1970 to protect investors against the loss of their investments in the event of a brokerage firm’s collapse due to:

		Bankruptcy
		Financial difficulties
		Fraud
		Theft

Since then, it has advanced over $500 million to help restore more than $13 billion to approximately 622,000 investors. The SIPC recovers investments for no less than 99 percent of investors that are eligible.

As long as the brokerage firm is a member of the SIPC, customers are protected by the SIPC. If the brokerage firm’s registration with the United States Securities and Exchange Commission (SEC) ends, then SIPC membership is automatically terminated. If the brokerage firm’s membership with the SIPC ends, the SIPC is powerless to protect customers after 180 days. The SEC typically steps in to stop a failed brokerage firm from letting SEC registration and SIPC membership lapse if customers are owed cash or securities.

If there was no SIPC in place, investors could suffer the loss of securities or money forever, or see their hard-earned assets locked up in court for years.

So if your brokerage firm fails, the SIPC quickly moves to recover any stocks, cash, and securities (within specified limits—commodity futures contracts, fixed annuity contracts, currency, and investment contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933 are ineligible for SIPC protection) held for you by the brokerage firm.

What the SIPC Does

The SIPC will either proceed as the trustee or coordinate efforts with an independent, federal court-appointed trustee to recover your investments. If your brokerage firm fails, you get back any non-negotiable securities already registered in your name or in the process of being registered. Any other securities are then distributed on a pro rata basis among all of the brokerage firm’s customers.

If the firm does not have enough money to cover initial claims, the SIPC’s monetary reserve is used to fulfill the remaining claims of each customer up to a $500,000 limit. This figure includes a limit of $100,000 on cash claims. Any recovered money goes to pay investors with claims exceeding the SIPC's $500,000 limit. Your account may also be transferred to another brokerage firm. You will be given the option to let the new firm handle your account or to move to a new brokerage firm that you yourself select.

Keeping Records

At anytime, while your brokerage firm is still in business, if there is an error in one of your transaction confirmations or monthly statements, you need to let them know about it immediately, in writing. You should also make a point of keeping a copy of correspondence that you send to your brokerage firm. If the brokerage firm’s records are wrong, you will need to prove it or the SIPC and the trustee will assume that all of the records they find are correct.