What is the primary purpose of the Securities Investor Protection Corporation (SIPC)?

Prepare for the Ohio Securities Industry Essentials Exam with an array of multiple choice questions. Benefit from detailed explanations and hints for each question. Boost your confidence and get exam ready!

The primary purpose of the Securities Investor Protection Corporation (SIPC) is to protect customers in the event that a brokerage firm fails. This organization was created to restore customer confidence in the securities industry by providing limited protection for investors when their brokerage firm is unable to return their cash and securities due to insolvency.

SIPC's coverage applies to various types of securities, including stocks and bonds, and is designed to protect the customer accounts up to a certain limit. If a brokerage goes bankrupt, SIPC steps in to ensure that customers can recover a portion of their funds, thereby helping to prevent significant financial loss for individual investors. This assurance encourages participation in the securities markets, thereby enhancing the overall trust in the financial system.

The other options represent different functions or services that are unrelated to SIPC's mission. For instance, insuring mortgages, overseeing investment company regulations, and providing loans to small businesses do not fall under SIPC’s responsibilities or purpose.

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