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Richard Nixon: Statement on Signing the Securities Investor Protection Act of 1970.

Richard Nixon: Statement on Signing the Securities Investor Protection Act of 1970.

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"Just as the Federal Deposit Insurance Corporation protects the user of banking services from the danger of bank failure, so will the Securities Investor Protection Corporation protect the user of investment services from the danger of brokerage firm failure."
"Just as the Federal Deposit Insurance Corporation protects the user of banking services from the danger of bank failure, so will the Securities Investor Protection Corporation protect the user of investment services from the danger of brokerage firm failure."

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Published by: Investor Protection on Mar 29, 2013
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3/28/13 7:25 PMRichard Nixon: Statement on Signing the Securities Investor Protection Act of 1970.Page 1 of 3http://www.presidency.ucsb.edu/ws/?pid=2870
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481 - Statement on Signing the Securities InvestorProtection Act of 1970.
December 30, 1970 
I AM SIGNING today the Securities Investor Protection Act of 1970. Thislegislation establishes the Securities Inv estorProtection Corporation (SIPC),a private nonprofit corporation, which willinsure the securities and cash left with brokerage firms by investors against loss from financial difficulties orfailure of such firms. Protection is provided up to an aggregate of $50,000per account, with a limit on coverage of cash of $50,000.In my message on economic policy and productivity on June 17, 1970, I urgedthe formation of a corporation to afford protection to small investors, backedfirst by industry payments and then by funds from the U.S. Treasury. The bipartisan efforts of the Congress, the administration, and the industry havenow resulted in this legislation--a vitally important advance in the consumer-protection field.Just as theFederal Deposit Insurance Corporation protects the user of   banking services from the danger of bank failure,so will the SecuritiesInvestor Protection Corporation protect the userof investment services fromthe danger of brokerage firm failure.This act protects the customer, not the broker, since only the customer is paidin the event of firm failure. It does not cover the equity risk that is alwayspresent in stock market investment, but it will assure the investor that thesolvency of the individual firm with which he deals will not be cause forconcern. It protects the small investor, not the large investor, since there is alimit on reimbursable losses. And it assures that the widow, the retiredcouple, the small investor who have invested their life savings in securities will not suffer loss because of an operating failure in the mechanisms of themarketplace. Virtually all brokers and dealers in the securities industry will be members of SIPC. These members will provide $75 million from assessments, trust fundtransfers, and lines of credit from commercial banks within 120 days. Theindustry will continue to pay assessments based on a percentage of their gross 
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