In the US, there are two bodies that guarantee investors accounts, in case the bank or broker should bankrupt:
- SIPC – Securities Investor Protection Corporation.
- FDIC – Federal Deposit Insurance Corporation.
The SIPC was established by Congress in 1970. Every broker that is interested in insuring his customers’ accounts can become a member of the SIPC. Insured brokers will list on their paperwork the following statement:
Member Securities Investor Protection Corporation or, for short Member SIPC.
The insurance that SIPC provides covers up to $500,000 per customer. Of which, only $100,000 can be in cash, and the rest in securities.
Congress created the FDIC in 1933. FDIC protects bank customers, and guarantees their deposits up to $100,000. The FDIC does not insure securities. Banks that are covered by the FDIC proudly display: Member FDIC.