The Securities Investor Protection Act of 1970 created the Securities Investor Protection Corporation (SIPC) as a fund or insurance program to protect investors of failed brokerage houses. The SIPC is a private nonprofit corporation funded by member brokerage firms membership fees (most registered brokerages have to be members). If member brokerages fail the SIPC steps in to protect investor's interests. If member brokerage fees are not sufficient to cover a particular case the SIPC can borrow money from the US treasury, so there is an ample supply of funds available for investor protection.
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The Securities Investor Protection Act of 1970 created the Securities Investor Protection Corporation (SIPC) as a fund or insurance program to protect investors of failed brokerage houses. The SIPC is a private nonprofit corporation funded by member brokerage firms membership fees (most registered brokerages have to be members). If member brokerages fail the SIPC steps in to protect investor's interests. If member brokerage fees are not sufficient to cover a particular case the SIPC can borrow money from the US treasury, so there is an ample supply of funds available for investor protection.
