Legal Definitions - SIPA

SIPA

SIPA stands for Securities Investor Protection Act. It is a law that was passed in 1970 to protect investors in case their brokerage firm fails.

For example, if you have money invested in a brokerage firm and that firm goes bankrupt, you may lose your money. However, if the firm is a member of the Securities Investor Protection Corporation (SIPC), which was created by the SIPA, you may be able to recover some or all of your money.

Another example is if a broker steals your money or engages in fraudulent activities, the SIPA may provide insurance coverage to help you recover your losses.

The Securities Investor Protection Act was created to protect investors from losing their money in case their brokerage firm fails or engages in fraudulent activities. The examples illustrate how the SIPA provides insurance coverage to help investors recover their losses in such situations.