CIPF provides limited protection for property held by a member firm on behalf of an eligible client, if the member firm becomes insolvent. Member firms are investment dealers that are members of IIROC (Investment Industry Regulatory Organization of Canada). These investment firms are also automatically members of CIPF.
CIPF coverage is custodial in nature. CIPF does not provide protection against any other type of risk or loss. If you have an account with a member firm, and that firm becomes insolvent, CIPF works to ensure that any property being held for you by the firm at that time is given back to you, within certain limits. Client property can include securities and cash. In certain circumstances, CIPF’s role may involve requesting the appointment of a trustee in bankruptcy.
Does CIPF Guarantee the Value of your Investment?
No, it does not. CIPF’s role is to ensure that clients of an insolvent member firm receive their property held by the member firm at the date of its insolvency. For example, suppose you buy 100 shares for $5000, and these shares are held for you in an account with a CIPF member firm. If your CIPF member firm becomes insolvent, CIPF’s objective is to ensure that the 100 shares are returned to you. CIPF does not protect or guarantee your initial investment of $5000. However, if the 100 shares are missing from your account, CIPF would provide compensation based on the value of the missing shares on the date of the member firm’s insolvency.