News Release

The new change is significant since all brokerage firms are required to mention their SIPC membership in advertisements for the investing public. Though not all brokerage firms elect to explain what SIPC is, the new "official explanatory statement" is expected to be used by many firms, resulting in opportunities for many investors to learn more about what SIPC does and does not do. The Securities Investor Protection Corporation is not aware of any similar bylaws or rules promulgated by investment-related regulatory, self-regulatory or similar organizations as a means by which to facilitate improved public understanding of the purpose and role of the organizations.

Under the new advertising bylaw change, brokerage firms wishing to explain what SIPC is must use one of the following two standardized phrases:

* "Member of SIPC, which protects securities customers of its members up to $500,000 (including $100,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org."

* "Member of SIPC. Securities in your account protected up to $500,000. For details, please see www.sipc.org."

In both of the cases, the words "Member of SIPC" may be omitted if the official explanatory statement is used in conjunction with the official SIPC symbol.

SIPC President Michael Don said: "I want to emphasize that this is a voluntary initiative on the part of SIPC. We are doing whatever it takes to make sure that as many investors as possible understand what we do and, just as importantly, what we do not do. As part of our commitment to improved public understanding, SIPC has developed a substantially new Web site and background brochure. These resources are designed for 'real people.' You don't have to be a securities lawyer to understand them. We are very proud of these and other investor education advances at SIPC and want to make sure that they are used by as many investors as is possible."

In 2001, SIPC completely overhauled its Web site at www.sipc.org to make it easier for investors to understand the organization and how to file claims. Included in the new site is the advanced "SIPC Claim Center," a step-by-step guided process that allows SIPC liquidation claims to be filled-out online. (This plain-English process is only intended to simplify the claims completion process. All original signed forms and related attachments still must be received by the designated trustee overseeing a liquidation proceeding.) The easy-to-understand SIPC Web site also features such sections as "Why We Are NOT the FDIC," "What SIPC Covers . and What It Does Not" and "Avoiding the Most Common Claims Process Errors."

The SIPC Web site also features the "How SIPC Protects You" brochure. In 2001, the brochure was completely reworked to make it easier for investors to understand. The new brochure provides plain English answers to the seven most commonly asked questions about SIPC. It also emphasizes the need for investors to document their concerns in writing as soon as they suspect that their funds are being mishandled. The brochure is available on the SIPC Web site in both HTML and downloadable PDF formats.

ABOUT SIPC

SIPC made net advances totaling an estimated $112 million to approximately 179,500 investors in 2001, compared to just $23 million paid out to 1,148 investors in 2000. The payments made by SIPC to investors in 2001 were roughly twice the previous one-year record of $63 million in 1981. The 2001 total included the largest liquidation case ever handled in SIPC's history.

From its creation by Congress in 1970 through December 2001, SIPC has advanced $513 million in order to make possible the recovery of $13.9 billion in assets for an estimated 622,000 investors. SIPC estimates that more than 99 percent of eligible investors have been made whole in the failed brokerage firm cases that it has handled to date.

SIPC is an important part of the overall system of investor protection in the United States. While a number of federal, self-regulatory and state securities agencies deal with cases of investment fraud, SIPC's focus is both different and narrow: Restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.

SIPC either acts as trustee or works with an independent court-appointed trustee in a fraud case to recover funds. The statute that created SIPC rules provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.

Recovered funds are used to pay investors whose claims exceed SIPC's protection limit of $500,000. SIPC often draws down its reserve to aid investors. Recovered funds also are used to replenish SIPC's reserve in the event that the reserve is tapped in the early stages of a liquidation proceeding.