SIPC protects against the loss of cash and securities — such as stocks and bonds — held by a customer at a financially-troubled SIPC-member brokerage firm. Most customers of failed brokerage firms when assets are missing from customer accounts are protected. There is no requirement that a customer reside in or be a citizen of the United States. SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.

SIPC does not protect against the decline in value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities.

SIPC does not protect claims against a broker for bad investment advice, or for recommending inappropriate investments. 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.

Working Group on Financial Markets - Wikipedia

Investments in the stock market are subject to fluctuations in market value. SIPC was not created to protect these risks. That is why SIPC does not bail out investors when the value of their stocks, bonds and other investment falls for any reason.

Instead, in a liquidation, SIPC replaces the missing stocks and other securities when it is possible to do so. SIPC protects cash in a brokerage firm account from the sale of or for the purchase of securities.

Cash held in connection with a commodities trade is not protected by SIPC. Money market mutual funds, often thought of as cash, are protected as securities by SIPC. SIPC protects stocks, bonds, Treasury securities, certificates of deposit, mutual funds, money market mutual funds and certain other investments as "securities. Securities and Exchange Commission under the Securities Act of Beware of Scam Involving the Misuse of SIPC's Name.

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