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Simple English definitions for legal terms
Securities Investor Protection Act
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A quick definition of Securities Investor Protection Act:
Securities Investor Protection Act: A law created in 1970 to help protect investors when their brokers or dealers are having financial problems. It established the Securities Investor Protection Corporation (SIPC), which is not a government agency, but helps to recover money for investors if their broker or dealer goes bankrupt.
A more thorough explanation:
The Securities Investor Protection Act (SIPA) is a federal law that was passed in 1970. It created the Securities Investor Protection Corporation (SIPC), which is not a government agency, but is designed to protect investors in case their brokers or dealers go bankrupt or are in financial trouble.
For example, if you have invested money with a broker and that broker goes bankrupt, you may lose your money. However, if the broker is a member of SIPC, you may be able to recover some or all of your money through the SIPC fund.
The purpose of the Securities Investor Protection Act is to provide some protection for investors in case of financial fraud or other problems in the securities industry. It is important for investors to understand their rights and protections under this law.
securities exchange | Securities Investor Protection Corporation