Canadian Investors Protection Fund CIPF

The CIPF, Canadian investors protection fund, is a not for profit organization designed to protect Canadian investors in the event that their investment dealer goes broke.  This is not a god given right for every investment dealer.  Investment dealers must meet specific regulatory requirements and be part of one of the CIPF sponsoring organizations.  In short should you have stocks with a broker who is a member of the CIPF and said broker goes broke the CIPF is there to make sure your investments don't evaporate into thin air.

What the CIPF will not protect

If you invest in unsuitable or risky securities and they lose value or go broke, the CIPF will not reimburse you.  The CIPF is not an organization to protect investors from bad investment making decisions.

How much will the CIPF cover?

The CIPF has placed a limit of 1 million dollars of coverage per person for losses of stocks, commodities/futures contracts, segregated insurance funds and cash.

If your investments cannot be returned the dollar value of your investments, calculated at the date of your investment dealers insolvency and not including market fluctuation, will be returned to you.  If you have more than one account under a CIPF investment dealer it is important to realise that this does not necessarily increase your coverage.  Coverage of 1 million dollars is extended to your 'general account' and 1 million dollars will be extended to each separate account.  The CIPF gives the example that if accounts are not considered separate than they are combined into one general account for coverage purposes.  An example of accounts that would be combined into one account are Cash accounts, margin accounts, short sale accounts etc…  Examples of separate accounts, which are each able to receive one million dollars in coverage are testamentary trusts, RESPs, registered retirement plans etc…For an exact explanation of what is considered to be part of one general account or separate accounts visit the CIPF site.

How do i know if my investment dealer is a member?

The CIPF maintains a current members list  http://cipf.ca/c_find_active.asp  where you can check whether or not your investment dealer is a member.

Even though it is rare for Investment Dealers to go broke the sub prime fiasco in the US and the large investment banks that went broke is a cautionary tale that Canadian investors should not ignore.