Securities Investor Protection Corporation (SIPC)
The Securities Investor Protection Corporation (SIPC), although created by the Securities Protection Act, it is neither a government agency nor a regulatory authority. It is a non-profit, membership corporation funded by its member securities broker/dealers.
BAC Florida Investments (BFI) is a member of the SIPC, an organization that protects customers of broker/dealers registered with the Securities and Exchange Commission (SEC), thereby promoting confidence in the United States securities markets.
The protection SIPC offers is against losses caused by the financial failure of the broker/dealer, but not against a change in the market value of securities in the customers' accounts at the broker/dealer. As a result of BFI membership in the SIPC, securities in your account are protected up to $500,000 (of which $250,000 can be for claims for cash awaiting reinvestment).
BFI’s customers benefit from additional protection in excess of SIPC coverage by virtue of its arrangement with Pershing LLC, a subsidiary of the Bank of New York Mellon Corporation (Pershing LLC). BFI executes, clears, and settles its general securities transactions through Pershing LLC, a leading global provider of financial business solutions to many of the world’s most respected financial organizations. Pershing LLC has remained focused on the safekeeping, servicing, segregation and reporting of assets held in its custody.
Through the above mentioned arrangement, the securities of BFI’s clients are held in custody in customers’ accounts at Pershing LLC. Pershing LLC provides coverage in excess of SIPC limits from certain underwriters at Lloyd’s, in conjunction with another commercial insurance company. The excess of SIPC insuranc program is valid through February 10, 2014. It provides the following protection for Pershing LLC’s global client assets:
- An aggregate loss limit of $1 billion for eligible securities—over all client accounts
- A per client loss limit of $1.9 million for cash awaiting reinvestment—within the aggregate loss limit of $1 billion.
The SIPC account protection applies when an SIPC member firm fails financially and is unable to meet obligations to securities customers, but it does not protect against losses from the rise and fall in the market value of investments. The excess of SIPC coverage does not protect against loss due to market fluctuation.