Updated August 13, 2026. Quick answer: SIPC protects the custody of what is in your brokerage account when the brokerage fails. It does not protect the value of anything. Of the 8 things people most often assume are covered, 5 are not — and the two most valuable corrections are that a falling investment was never a SIPC event at all, and that a money market fund is a security, not cash, so it is not competing for the $250,000 cash sub-limit.
The verdict table
| The situation | Covered? | Why | Source |
|---|---|---|---|
| Your fund fell 30% | No | SIPC “does not protect against the decline in value of your securities”. This is the whole point of the programme and the thing it is most often mistaken for. | www.sipc.org |
| Your broker recommended something unsuitable | No | Bad advice is not a custody failure. SIPC names it explicitly. | www.sipc.org |
| Commodity futures contracts | No | Excluded unless held in a special portfolio-margining account. | www.sipc.org |
| Foreign exchange trades | No | Named in SIPC’s own exclusion list. | www.sipc.org |
| An unregistered limited partnership or fixed annuity | No | Investment contracts and fixed annuities not registered with the SEC are outside the definition. | www.sipc.org |
| Cash sitting in the account | Yes, to $250,000 | Covered, but under a sub-limit — not the headline $500,000. | www.sipc.org |
| A money market fund | Yes, as a security | The correction most people need: a money market fund is not cash for this purpose, so it is not squeezed into the $250,000 cash sub-limit. | www.sipc.org |
| Stocks, bonds, Treasuries, CDs held in the account | Yes, to $500,000 | Custody protection: getting the positions back, not what they are worth. | www.sipc.org |
The sentence that decides most of it
“SIPC does not protect against the decline in value of your securities.” — www.sipc.org
SIPC draws the comparison itself, and it is the cleanest way to hold the distinction:
“It is important to recognize that SIPC protection is not the same as protection for your cash at a Federal Deposit Insurance Corporation (FDIC) insured banking institution because SIPC does not protect the value of any security.” — www.sipc.org
Deposit insurance and SIPC answer different questions. The FDIC question is “is the money still there”. The SIPC question is “are the positions still there”. Neither asks what they are worth. Our comparison of the three programmes covers what each one does cover.
The $500,000 is not one pot
“The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.” — www.sipc.org
The cash figure is a defined statutory term rather than a policy choice, and it moves: the statute calls it the standard maximum cash advance amount and provides for adjustment. The $500,000 ceiling itself is set at 15 U.S.C. 78fff-3(a).
A money market fund is a security, not cash
“Money market mutual funds, often thought of as cash, are protected as securities by SIPC.” — www.sipc.org
Two consequences, and they run in opposite directions. In your favour: money in a money market fund is not eating into the $250,000 cash sub-limit. Against you: a money market fund is not a deposit and carries no deposit insurance at all — a distinction our page on cash at a brokerage works through. The word “cash” on a brokerage statement is doing a lot of unmarked work.
The limit multiplies by capacity, not by account
“SIPC protection of customers with multiple accounts is determined by “separate capacity.” Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Examples of separate capacities are: individual account; joint account; an account for a corporation; an account for a tr…” — www.sipc.org
Two individual accounts at the same firm are one capacity and share one $500,000 limit. An individual account, a joint account and an IRA are three capacities. The rule has a direct statutory root: a customer holding accounts in separate capacities is “deemed to be a different customer in each capacity”.
What actually happens, and the deadline that ends it
Claims run through a court-appointed trustee, not through SIPC’s front desk. SIPC’s own description is that claim forms come from the trustee’s website and are mailed to everyone who had an account in the previous 12 months. The figure being measured is your “net equity” — the account valued as if liquidated on the filing date, net of what you owe the firm.
The deadline is statutory and it is hard. Claims received after six months from publication of the trustee’s notice “shall be allowed” only by exception, and the court may set a shorter window of not less than 60 days for the fullest form of relief (15 U.S.C. 78fff-2(a)(3)). A brokerage failure is one of the few financial events where doing nothing for seven months can cost you the claim outright.
SIPC is not a regulator, and says so
“SIPC is neither a government agency nor a regulatory authority. If you have a complaint about your broker, you should contact FINRA or the SEC.” — www.sipc.org
So a dispute with a broker that is still trading is not a SIPC matter at all. SIPC appears when the firm fails.
What we could not establish, and are not going to invent
Three things this page deliberately does not answer:
- Whether unregistered promissory notes sold by a broker are covered. SIPA’s definition of “security” lists “any note”, and SIPC’s exclusion list never mentions promissory notes. Answering it would mean applying case law rather than reading the statute, so we state the question instead of the answer.
- SIPC’s own case and recovery statistics. Its public pages say only that it has “recovered billions of dollars for investors” since 1970 across “over 3,200 members”. We found no itemised figures outside its annual reports and are not going to estimate any.
- The regulatory text of “separate capacity” at 17 CFR part 300. The eCFR web interface served a bot-detection page rather than the rule. The capacity rule above is sourced to SIPC’s own statement and to the statute, which is enough for the claim being made and is not the same as having read the rule.
Sources
Every row in the table above is sourced to SIPC’s own pages or to the Securities Investor Protection Act itself, read on August 13, 2026.
| What it establishes | Read at |
|---|---|
| SIPC never covers market loss / decline in the value of your securities — that risk is on the investor, not SIPC. | www.sipc.org |
| SIPC explicitly distinguishes itself from FDIC deposit insurance: SIPC protects custody of cash/securities, not their value. | www.sipc.org |
| SIPC’s own plain-language statement of the protection limit: $500,000 total, including a $250,000 sub-limit for cash. | www.sipc.org |
| The $500,000 per-customer SIPC advance ceiling is set by statute, 15 U.S.C. 78fff-3(a). | uscode.house.gov |
| The $250,000 cash sub-limit is a defined term in the same statute, called the ‘standard maximum cash advance amount,’ and is indexed for inflation every five years starting 2011. | uscode.house.gov |
| SIPC’s protection limit is applied per ‘separate capacity,’ not per person — each distinct capacity (individual, joint, IRA, trust, etc.) gets its own $500,000/$250,000 limit. | www.sipc.org |
| The ‘separate capacity’ rule has a direct statutory root: SIPA treats a customer who holds accounts in different capacities as a different customer in each capacity for purposes of the advance limit. | uscode.house.gov |
| A money market mutual fund is treated by SIPC as a security, not as cash — so it is not subject to the $250,000 cash sub-limit (it falls under the $500,000 securities limit instead). | www.sipc.org |
| SIPA’s own definition of ‘security’ (15 U.S.C. 78lll(14)) is broad — notes, stocks, bonds, registered investment contracts, etc. — but it expressly excludes currency and commodity/futures contracts. | uscode.house.gov |
| SIPC’s own plain-language exclusion list: commodity futures contracts, foreign exchange trades, unregistered investment contracts (e.g., limited partnerships), unregistered fixed annuity contracts, and non-qualifying digital/crypto assets are not protected. | www.sipc.org |
| SIPC does not cover losses caused by a broker’s bad investment advice or unsuitable recommendations — that is treated as a general creditor damage claim, not a SIPC-protected net-equity claim. | www.sipc.org |
| ‘Net equity’ — the figure SIPC protection is actually measured against — is a defined statutory term: the value of the customer’s account as if liquidated on the filing date, minus any amount the customer owed the firm. | uscode.house.gov |
| SIPC’s own description of how a customer claim is actually filed and processed in a SIPA liquidation, in five steps. | www.sipc.org |
| SIPA sets a hard statutory bar date for customer/creditor claims: six months after the trustee publishes notice of the liquidation, with a separate, shorter (up to 60-day) window that determines whether a late-but-timely net-equity claim still gets paid from customer property versus only from the SIPC fund. | uscode.house.gov |
| SIPC’s own disclaimer: it is neither a government agency nor a regulatory authority, and does not handle broker complaints outside of a liquidation. | www.sipc.org |
| SIPA’s definition of ‘customer’ includes anyone who deposited cash with the failed firm for the purpose of buying securities, whether or not the firm actually made the purchase — this is the statutory basis for coverage of misapplied/never-invested customer cash, as distinct from investment losses. | uscode.house.gov |
General information about how SIPC protection works, not legal or financial advice. SIPC’s coverage limits are statutory and adjust over time; confirm the current figures at sipc.org before relying on them, and if a brokerage you hold an account with enters liquidation, the trustee’s notice governs the deadlines, not this page.