SIPC is not the securities world equivalent of FDIC. With a reserve of slightly more than $1 billion, SIPC could not keep its doors open for long if its purpose was to compensate all victims in the event of loss due to investment fraud.
Securities Investor Protection Corporation was created by congressional charter in 1970. Their mission is to return customer’s cash, stock, and other securities when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing.
Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court.
Please remember that SIPC does not insure against investment fraud or the risks inherent in investing. All of the information above and more is available on their website at www.sipc.org.