Exercise
Answer TRUE or FALSE.
1. TRUE or FALSE. If a broker-dealer is not covered by SIPC, it must disclose this fact only when asked by a customer.
2. TRUE or FALSE. A court can issue a protective decree when petitioned by SIPC due to an imminent danger to customer assets.
3. TRUE or FALSE. SIPC protects against all types of loss, but not all claims will be repaid.
4. TRUE or FALSE. Accounts owned by the same customer are always combined for SIPC coverage purposes.
Answers
1. FALSE. If a broker-dealer is not covered by SIPC, it must disclose this fact on the customer’s trade confirmation statement and tell customers this if asked.
2. TRUE. If there is an imminent danger of member failure, then SIPC may petition a federal court for a protective decree that will result in the appointment of a trustee.
3. FALSE. SIPC does not protect against all losses. For example, if the stock market crashes, SIPC will not