SIE Exam Question 275: Answer and Explanation

Question: 275

SIPC is an insurance organization designed to protect investors against loss:

• A. When their brokerage firm makes provably unsuitable recommendations
• B. When their brokerage firm fails to notify them of an impending stock market decline
• C. When their broker-dealer goes bankrupt
• D. When their brokerage firm loses or misplaces their securities.

Correct Answer: C

Explanation:

C: Securities Investor Protection Act of 1970 created an insurance entity called the Securities Investor Protection Corporation. Its purpose is to provide protection to customers of bankrupt brokerage firms in the event the customers' cash and or securities have not been found during the bankruptcy proceedings. It is not investment insurance. Once you are finished, click the button below. Any items you have not completed will be marked incorrect.