Hypothetical Situations

If NFS was supposed to have $1 billion in customer assets on the date it failed, of which $1 million was yours, but it only had $900 million due to bad loans, you would get back 90 percent of your $1 million, or $900,000, worth of securities from the common pool ($900 million ÷ $1 billion × $1 million). This payment would leave you with a $100,000 deficit. As a result, SIPC would dip into its funds, up to your individual $500,000 limit. In this case, you would get $100,000 from SIPC and therefore be made whole.

If NFS was supposed to have $1 billion in customer assets on the date it failed, of which $5 million was yours, but it only had $900 million due to bad loans, you would get back 90 percent of your $5 million, or $4.5 million, worth of securities from the common pool ($900 million ÷ $1 billion × $5 million). This payment would leave you with a $500,000 deficit. As a result, SIPC would dip into its funds, up to your individual $500,000 limit. In this case, you would get the SIPC maximum of $500,000 and therefore be made whole.

If NFS was supposed to have $1 billion in customer assets on the date it failed, of which $4 million was yours in securities and $1 million was yours in a cash account for a total of $5 million, but it only had $900 million due to bad loans, you would get back 90 percent of your $5 million, or $4.5 million, from the common pool, consisting of $3.6 million worth of securities ($900 million ÷ $1 billion × $4 million) and $900,000 in cash ($900 million ÷ $1 billion × $1 million). This payment would leave you with a $500,000 deficit consisting of $400,000 of securities and $100,000 of cash. As a result, SIPC would dip into its funds, up to your individual $500,000 limit ($400,000 for securities and $100,000 for cash). In this case, you would get the SIPC maximum of $500,000 and therefore be made whole.