Final answer:
SIPC is the Securities Investor Protection Corporation, a non-profit organization established to protect investors in the event of a brokerage firm failure. It provides limited protection for securities and cash held by a failed brokerage firm. SIPC ensures that customers can recover their securities and cash within certain limits.
Step-by-step explanation:
SIPC stands for Securities Investor Protection Corporation. It is a non-profit organization created by the United States Congress to protect investors in the event that a brokerage firm fails. SIPC provides limited protection for customers' securities and cash held by a failed brokerage firm. It does not protect against investment losses due to market fluctuations.
SIPC ensures that customers of failed brokerage firms can recover their securities and cash, up to certain limits. It does this by either returning the securities and cash directly to the customers or by arranging for them to be transferred to another brokerage firm.
As part of its mission, SIPC requires that information about its services, including a copy of the SIPC brochure, be made available to customers, so they are aware of their rights and the level of protection provided.