Are Online Brokers Safe?

What SIPC covers

SIPC protection is capped at $500,000 per customer, which includes a $250,000 limit for cash. Within that, it covers cash held for buying or selling securities, and securities themselves: stocks, bonds, Treasury securities, certificates of deposit, mutual funds and money market funds. It also covers cash denominated in non-US currency.

What SIPC explicitly does not cover

SIPC is direct about its own limits, and the exclusions are more instructive than the coverage:

• A decline in the value of your securities
• Losses from a broker's bad investment advice, or from recommending unsuitable investments
• Commodity futures contracts, with limited exceptions
• Foreign exchange trades
• Unregistered investment contracts and fixed annuity contracts
• Digital and crypto assets that are unregistered investment contracts, along with stablecoins, currencies and commodities

SIPC describes its own role as protecting the custody function of the broker-dealer: restoring securities and cash that were in the account when liquidation began. That is the whole scope.

How to check any US broker yourself in two minutes

1. Find the legal entity name in the account agreement or the website footer — not the brand name on the app.
2. Search that name on FINRA BrokerCheck.
3. Confirm the registration is active, and note the CRD number and SEC file number.
4. Read the disclosure section: regulatory events, arbitrations and other matters are listed there.
5. Confirm SIPC membership at sipc.org, or on the firm's own disclosures page.

Every broker review on this site publishes the legal name, CRD number and SEC file number specifically so you can run this check against our claims rather than trusting them.

What an enforcement record does and does not tell you

Large firms accumulate regulatory matters simply by being large and old, so a raw count of disclosures is a poor signal. What is worth reading is the substance: what the conduct was, whether it involved retail customers, whether it involved disclosure to those customers, and how recent it is.

One example from our own database. In March 2025, FINRA ordered Robinhood entities to pay $29.75 million — $3.75 million in restitution to customers and $26 million in fines — covering anti-money-laundering programme failures, inadequate supervision of clearing technology and of paid social-media promotion, and inaccurate disclosure about the practice of collaring market orders. Customers received restitution for orders that were collared, cancelled and re-entered at inferior prices. The firm settled without admitting or denying the findings, and separately settled SEC charges for $45 million in January 2025.

That is a materially different signal from an old administrative matter about recordkeeping, because it concerns what retail customers were told about how their own orders were handled. This is why our safety score reflects the content of enforcement matters rather than counting them.

Practical steps that actually reduce risk

• Check the entity, not the brand, and re-check it if the firm is acquired
• Understand the SIPC cash sublimit if you hold large uninvested balances
• Know which sweep programme your cash sits in and what covers it
• Enable strong authentication, and treat account-recovery email security as part of account security
• Keep your own records of statements and trade confirmations