Rule 2266: SIPC Notice, Once a Year

Rule 11 of 11 in this unit1.1.3

1.1.3 Other Regulators and Agencies

SIE outline 1.1.3

Rule 2266: SIPC Notice, Once a Year

Written notice at account opening and at least annually. Introducing and clearing firms may assign the duty. NOT a one-time-only disclosure.

The method for this kind of question

Name the agency, then the one number

Now answer

1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Harder

A customer's shares drop 40 percent in value after a bad earnings report. Which agency covers the loss?

A. SIPC. Tempts one becauses SIPC sounds like general investor insurance. It only replaces custody lost when a member firm itself fails, never a market price move. B. The FDIC. The FDIC's excluded list names stocks by name. C. Neither, a market decline is not an insurable event under either program D. The SEC pays the difference. The SEC is a regulator and enforcer, not an insurer.

How sure are you?

Sure Fairly sure Guessing

Correct: C. SIPC's own page excludes a decline in the value of your securities, and the FDIC never covers securities at all. A price drop is a market outcome, not a firm failure or a bank deposit.

A. Tempts you because SIPC sounds like general investor insurance. It only replaces custody lost when a member firm itself fails, never a market price move.

B. The FDIC's excluded list names stocks by name. It was never in scope here.

D. The SEC is a regulator and enforcer, not an insurer. Nothing in the outline gives it a claims-paying role.

Unit: SIE outline 1.1.3

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