Investment Advisors

Since its creation in 1969, CIPF has stepped in to help investors following the failure of 21 investment dealers. In fact, CIPF has paid or provided $47 million for claims and related expenses net of recoveries arising from these failures.

Yet many investors are unaware of the significant benefits of CIPF Coverage when a Member investment dealer fails.

Do you need IIROC Compliance Continuing Education (CE) Credits?

To help you understand the protection CIPF provides so that you can comfortably discuss it with your clients, information about CIPF coverage is set out in the Continuing Education module “Overview of Canadian Investor Protection Fund (CIPF)”. This webcast is IIROC accredited and qualifies for 0.5 hours of Compliance CE credits. To register click here.

CIPF Coverage

For detailed information regarding how our coverage works, you can also refer to these links: FAQs and CIPF Coverage.

CIPF has also launched the CIPF Advisor Series. This Resource Centre provides online materials to educate and inform advisors about CIPF’s role in the Canadian financial system.

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CIPF's coverage is determined after all available assets of the insolvent Member are returned to customers by a trustee/receiver. For bankruptcies of a Member administered under Part XII of the Bankruptcy and Insolvency Act (Canada), the process of returning all available assets of the Member to customers is generally done by a trustee using the 4-steps outlined below.

  1. At the date of insolvency, CIPF or the trustee/receiver will determine the TOTAL CLIENT NET EQUITY, and the size of the CUSTOMER POOL.

    allocation_of_losses_to_customers_2   and     allocation_of_losses_to_customers_02

  2. CIPF/trustee will then determine EITHER:

    allocation_of_losses_to_customers_03

                                                                     OR

    allocation_of_losses_to_customers_04

     

  3. CIPF/trustee will calculate the SHORTFALL, if there is one, as:
    SHORTFALL = TOTAL CLIENT EQUITY less CUSTOMER POOL
  4. CIPF/trustee will allocate the SHORTFALL to each customer in proportion to their claim for net equity.

    HERE IS AN EXAMPLE:
    CIPF/trustee determines the following:
    TOTAL CLIENT NET EQUITY $2.0 BILLION
    CUSTOMER POOL $1.9 BILLION
    SHORTFALL $100 MILLION or 5% (100 million / $2 billion)

    CLIENT 1 HAS CLIENT NET EQUITY OF $2 MILLION:
    LOSS ALLOCATED = $100,000 (5% OF $2 MILLION)
    CIPF COVERAGE = $1 MILLION
    LOSS TO CUSTOMER = NIL

    CLIENT 2 HAS CLIENT NET EQUITY OF $20 MILLION:
    LOSS ALLOCATED = $1,000,000 (5% OF $20 MILLION)
    CIPF COVERAGE = $1 MILLION
    LOSS TO CUSTOMER = NIL

    CLIENT 3 HAS CLIENT NET EQUITY OF $25 MILLION:
    LOSS ALLOCATED = $1,250,000 (5% OF $25 MILLION)
    CIPF COVERAGE= $1 MILLION
    LOSS TO CUSTOMER NOT COVERED BY CIPF= $250,000

    This example is for illustrative purposes and each insolvency can produce different results.

For more information, please refer to the CIPF Coverage Policy.

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