The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The funding for CIPF comes primarily from assessments levied on its member firms. These assessments are based on a formula that considers the firm’s revenue and risk profile. While CIPF aims to protect investors from losses due to the insolvency of a member firm, it does not cover losses resulting from market fluctuations or poor investment decisions. The protection is generally limited to a certain amount per account category. CIPF has the authority to act as trustee for customer accounts in the event of a member firm’s insolvency, facilitating the transfer of assets to another member firm or making payments to customers. The CIPF coverage is crucial for maintaining investor confidence in the Canadian securities market. The CIPF’s funding mechanism is designed to ensure that it has sufficient resources to meet its obligations. The fund can also borrow money if needed. Member firms are required to maintain accurate records and comply with CIPF regulations. The CIPF regularly reviews its coverage limits and assessment formula to ensure that they are appropriate. CIPF coverage is automatic for eligible customers of member firms; no application is required. The key is to understand that CIPF protection extends to insolvency-related losses, not investment losses.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. However, this protection is subject to certain limits and conditions. Specifically, CIPF coverage is generally limited to $1 million per account type (general, separate, or registered). In the scenario described, several factors influence the extent of CIPF coverage available to the clients.

Firstly, the fact that some clients have multiple accounts with the same firm does not automatically entitle them to multiple $1 million coverages. CIPF coverage is applied per account type. If a client has multiple general accounts, the combined coverage for all general accounts is capped at $1 million.

Secondly, the discovery of fraudulent activity by the firm’s employees introduces a complex element. While CIPF is designed to protect against insolvency, it may also cover losses resulting from misappropriation of client assets due to fraud, subject to the $1 million limit per account type. The key is whether the losses are directly attributable to the firm’s insolvency and the fraudulent activity contributed to the insolvency.

Thirdly, the existence of errors and omissions insurance held by the firm does not directly impact CIPF coverage. E&O insurance is designed to protect the firm against liability for negligence or errors, and any payout from such insurance would benefit the firm, potentially increasing the assets available to creditors, including clients. However, it does not reduce the CIPF’s obligation to provide coverage up to the $1 million limit.

Therefore, in the given scenario, the most accurate statement regarding CIPF coverage is that eligible clients are generally protected up to $1 million per account type, subject to the terms and conditions of CIPF, regardless of the firm’s E&O insurance. The fraudulent activity does not automatically negate CIPF coverage, but it will be subject to investigation and validation by the CIPF.

CIRO’s risk-based approach to regulation involves assessing member firms’ risk profiles and tailoring supervisory activities accordingly. The CIRO Risk Trend Report (RTR) is a key tool used in this process. The RTR aggregates data from various sources, including financial reports, compliance reviews, and surveillance activities, to identify emerging trends and potential risks within the securities industry. The RTR helps CIRO to proactively identify areas of concern and allocate resources to address them effectively. The report is not solely focused on past performance but also incorporates forward-looking indicators to anticipate future risks.

The Uniform Capital Formula is designed to ensure that securities dealers maintain adequate capital to meet their financial obligations. A critical component of this formula is the calculation of risk-adjusted capital, which involves deducting various charges from a firm’s net capital. These charges reflect the potential risks associated with different assets and activities. One such charge is the inventory haircut, which is a percentage reduction applied to the market value of a firm’s inventory of securities. The haircut percentage varies depending on the type of security and its marketability.

In this scenario, the firm is holding a significant position in thinly traded, unlisted corporate bonds. Because these bonds are not actively traded, their market value is more difficult to determine, and they are more susceptible to price fluctuations and liquidity risk. Therefore, the CIRO prudential rules typically prescribe a higher haircut percentage for such securities. The exact percentage would depend on the specific characteristics of the bonds and the applicable CIRO guidelines, but it would generally be higher than the haircut applied to more liquid, actively traded securities. A reasonable estimate for the haircut on thinly traded, unlisted corporate bonds could be 15% or higher, depending on the specific circumstances. A 15% haircut on a $2 million position would result in a capital charge of $300,000.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. CIPF coverage is generally triggered when a member firm becomes insolvent and is unable to return customer assets. The fundamental purpose of CIPF is to protect investors from the financial consequences of a member firm’s insolvency, not to guarantee investment performance or protect against market losses. It’s crucial to understand that CIPF coverage extends to property held by the member firm on behalf of the customer, such as cash, securities, and other assets. However, the specific assets covered and the extent of coverage are subject to CIPF rules and regulations.

CIPF coverage is not unlimited. There are maximum coverage limits per customer account. These limits are designed to provide a reasonable level of protection while ensuring the fund’s sustainability. It is important for investors to be aware of these limits and to consider whether their holdings exceed the coverage threshold. If an investor has multiple accounts with the same member firm, the coverage limits may apply separately to each eligible account, subject to certain conditions.

While CIPF aims to restore customers to the position they would have been in had the insolvency not occurred, there are situations where full recovery may not be possible. For instance, if a customer’s claim exceeds the CIPF coverage limits, the customer may experience a loss. Additionally, the recovery process can take time, and customers may face delays in accessing their funds or securities. CIPF works diligently to process claims and distribute assets as quickly as possible, but the complexity of insolvency proceedings can impact the timeline. Therefore, understanding the scope and limitations of CIPF coverage is essential for investors and financial professionals alike.

Segregation of client assets is a fundamental principle in the securities industry, designed to protect customer property in the event of a firm’s insolvency. CIRO regulations mandate that member firms must segregate client assets from their own proprietary assets. This means that client securities and cash must be held in separate accounts and clearly identified as belonging to the clients. The purpose of segregation is to ensure that client assets are not available to the firm’s creditors in the event of bankruptcy. Firms are required to maintain detailed records of all client assets and to perform regular reconciliations to ensure that the records are accurate and up-to-date. Any deficiencies in segregation must be promptly corrected. The segregation requirements apply to all types of client accounts, including cash accounts, margin accounts, and registered accounts. Failure to properly segregate client assets can result in severe penalties, including fines, suspensions, and even revocation of membership.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The core principle is to protect customer assets held by the member firm. However, CIPF coverage does not extend to losses resulting from market fluctuations. The question hinges on understanding the scope of CIPF protection. While the fund safeguards assets against insolvency-related losses, it does not act as an insurance policy against poor investment performance or general market downturns. Furthermore, investments in products that are not conducted through a member of CIRO or IIROC, are not covered by CIPF.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms, up to a certain limit, in the event of the firm’s insolvency. The key here is understanding what is *not* covered. CIPF does *not* protect customers from losses due to market fluctuations or the changing value of their investments. It also doesn’t cover losses arising from unsuitable investment advice. CIPF protection is triggered by insolvency, meaning the firm cannot meet its obligations. Negligence or fraud committed by an employee of the firm *could* potentially lead to a CIPF claim if it results in missing assets due to the firm’s insolvency, but the critical element is still the insolvency itself.

Therefore, the most accurate answer is that CIPF protects against losses resulting from the insolvency of a member firm, specifically when customer assets are missing as a result. This is the core purpose of the fund. While fraud or negligence *might* contribute to a situation where CIPF is involved, the trigger is the insolvency and the resulting asset shortfall. The other options, while representing potential risks in investing, are not the direct focus of CIPF protection. CIPF is a safety net against firm failure, not a guarantee against poor investment outcomes or misconduct that doesn’t lead to insolvency.

When a dealer member acts as a principal in a transaction, it means the firm is trading for its own account, taking on the risks and rewards of ownership. Conversely, when acting as an agent, the firm is facilitating a transaction on behalf of a client, without assuming ownership or risk. Non-arms length transactions, which involve related or affiliated parties, present unique challenges due to the potential for conflicts of interest and the risk of unfair pricing. CIRO has established specific rules and guidelines to address these concerns. Rule amendments related to non-arms length transactions aim to ensure that such transactions are conducted at fair market value and that all conflicts of interest are properly disclosed. Limited guarantees, where a related company provides a guarantee for the obligations of a dealer member, can also create complex financial relationships. CIRO requires careful monitoring of these guarantees to assess their impact on the dealer member’s financial stability. Consolidated financial reporting of related companies is essential to provide a comprehensive view of the financial health of the entire group. This allows regulators to identify potential risks and vulnerabilities that may not be apparent from the individual financial statements of the dealer member.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. CIPF coverage is triggered when a member firm becomes insolvent, meaning it cannot meet its financial obligations. It is important to understand what is not covered by CIPF. Losses due to market fluctuations, poor investment advice, or the default of issuers of securities are not covered. CIPF protection is limited to losses resulting from the insolvency of a member firm. The fund’s primary goal is to return missing property, and if that’s not possible, to compensate customers within defined limits.

In the scenario presented, the brokerage firm’s actions led to a loss for the client, but it doesn’t necessarily trigger CIPF coverage. The key lies in determining if the firm’s actions caused insolvency. If the firm remains solvent and able to meet its financial obligations, even with the error, CIPF would not be involved. If the firm becomes insolvent because of the compensation it needs to pay to the client, then CIPF coverage might be triggered. However, CIPF is only triggered if the firm becomes insolvent.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. The key is understanding what constitutes “customer name securities” and how CIPF values them. Customer name securities are those registered in the client’s name and held by the member firm. In an insolvency, CIPF aims to return these securities to the customer. If this isn’t possible, CIPF will compensate the customer up to a certain limit, based on the market value of the securities at the time of the firm’s bankruptcy. The firm’s records are crucial for determining ownership and valuation. However, if discrepancies arise, CIPF will conduct its own investigation to ascertain the rightful owner and value. The CIPF coverage applies to securities held for investment purposes, not for speculative or manipulative activities. Therefore, even if the securities are held in “street name” (registered in the name of the brokerage), if the firm’s records clearly identify them as belonging to the customer, they are generally protected. The crucial point is the ability to accurately determine ownership and value at the time of insolvency, which is what dictates CIPF’s response.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The core principle is to cover losses resulting from the insolvency of a member firm, not from market fluctuations or poor investment decisions. While CIPF aims to restore customers to the position they would have been in had the insolvency not occurred, this is subject to limitations. CIPF coverage is not unlimited; it has maximum coverage limits per customer account category. Losses due to fraudulent activities directly perpetrated by the customer themselves are not covered. Furthermore, CIPF protection does not extend to losses stemming from market declines or the failure of investments themselves, even if those investments were recommended by the member firm. The protection is triggered by insolvency, focusing on the shortfall of assets held by the firm, not the performance of those assets. Therefore, the scenario described aligns with the fundamental purpose of CIPF, which is to protect investors from losses due to the insolvency of a member firm, subject to the fund’s coverage limitations and excluding losses from market fluctuations or customer fraud.

Related and affiliated companies can engage in non-arm’s length transactions, which are transactions where one party has the ability to influence the other. These transactions can create conflicts of interest and raise concerns about fair pricing and disclosure. Rule amendments have been implemented to address these concerns and ensure that non-arm’s length transactions are conducted in a transparent and equitable manner. Limited guarantees are guarantees provided by a related or affiliated company that are limited in scope or amount. These guarantees can affect the financial position of the guarantor and the guaranteed party. Consolidated financial reporting of related companies is required under certain circumstances, providing a more comprehensive view of the financial performance and position of the group. Financial assistance provided by a dealer member to a related or affiliated company can raise concerns about capital adequacy and potential conflicts of interest. Changes in ownership or share capital of dealer members and holding companies require regulatory approval to ensure that the changes do not jeopardize the financial stability of the firm.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The key here is understanding what is *not* covered. While CIPF covers securities and cash held by the member firm, it does *not* cover losses due to market fluctuations. Options trading, due to its inherently speculative nature and the potential for significant losses based on market movements, falls squarely within the realm of market risk. Therefore, any losses incurred by Evelyn due to unsuccessful options trades are not covered by CIPF, regardless of whether the firm followed proper procedures. CIPF is designed to protect against the insolvency of the firm itself, not against poor investment decisions or market volatility. Furthermore, the fact that the firm followed proper procedures in executing the trades is irrelevant to CIPF coverage; the loss is still due to market risk. The focus is on the reason for the loss, not the broker’s actions. Even if the broker gave bad advice, CIPF does not cover losses from bad advice. It covers losses resulting from the firm’s insolvency.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. The level of protection is generally limited to \$1 million per customer account category. However, there are specific scenarios where the protection might be less than \$1 million. One such scenario involves related accounts. If multiple accounts are held by related individuals or entities and are deemed to be beneficially owned by the same person, CIPF may aggregate the claims across those accounts, effectively reducing the overall protection available. For instance, if a parent and their minor child each have an account at the same member firm, and the funds in the child’s account originated from the parent and are managed by the parent, CIPF might consider these accounts as beneficially owned by the parent. Consequently, the combined protection for both accounts would be capped at \$1 million. This is to prevent individuals from circumventing the protection limit by spreading their investments across multiple related accounts. The key consideration is beneficial ownership and control, not merely the legal ownership of the accounts. The CIPF aims to protect genuine investors from losses due to the insolvency of a member firm, while also preventing abuse of the system through the creation of multiple accounts controlled by a single beneficial owner.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. However, this protection is subject to certain limits and conditions. Specifically, CIPF protection does not extend to losses resulting from market fluctuations or declines in the value of investments. It covers losses of property held by the member firm on behalf of the customer, but only when the firm becomes insolvent. Negligence, errors in judgment, or poor investment decisions by the firm, absent insolvency, are not covered by CIPF. While insurance coverage maintained by the firm might address some of these issues, CIPF itself is not the primary source of recovery in such scenarios. CIPF protection is triggered by insolvency, not by a decline in investment value or mismanagement. The investor must pursue other avenues for recourse in cases of negligence or poor investment advice.

CIRO’s risk management framework emphasizes the importance of maintaining an effective compliance regime. This includes establishing clear policies and procedures, conducting regular risk assessments, and monitoring compliance with regulatory requirements. The CIRO Risk Trend Report (RTR) provides valuable insights into emerging risks and industry trends, helping firms to proactively address potential vulnerabilities. Maintaining open communication with CIRO and promptly reporting any material changes to the business model are also crucial elements of an effective compliance regime.

Therefore, the correct answer is that an effective compliance regime involves establishing clear policies, conducting risk assessments, and monitoring compliance with regulations.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. The level of protection is generally capped. While the basic coverage is significant, it is not unlimited. CIPF protection is triggered when a member firm becomes insolvent, not simply when a client experiences investment losses due to market fluctuations or poor investment advice. CIPF protection covers securities and cash held by the member firm on behalf of the client. It does not cover losses resulting from unsuitable investments or fraudulent activities perpetrated by individuals not directly associated with the insolvent firm. The protection is designed to restore clients to the position they would have been in had the insolvency not occurred, within the limits of CIPF coverage.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The key is understanding what is *not* covered. While CIPF covers securities, cash, and other property held by the member firm on behalf of the customer, it specifically excludes losses due to market fluctuations. The fund’s mandate is to return property, not to compensate for investment losses. Commodity futures contracts are also generally excluded from CIPF coverage, as they are not considered “property held by the member firm.” Furthermore, losses resulting from fraudulent activities perpetrated *by the client* are not covered. The CIPF is designed to protect investors from the insolvency of a member firm, not from their own misconduct. Therefore, losses stemming directly from a client’s own fraudulent actions are not eligible for compensation.

Segregation of client assets is a fundamental principle in the securities industry, designed to protect client assets from being used for the firm’s own purposes, especially in the event of insolvency. CIRO regulations mandate that member firms must segregate client assets from their proprietary assets. This segregation ensures that client assets are readily identifiable and available to be returned to clients if the firm fails. The segregation requirements apply to various types of assets, including securities and cash. Firms must maintain accurate records of client holdings and perform regular reconciliations to ensure that the segregated assets match the client records. Deficiencies in segregation can lead to severe regulatory sanctions and reputational damage. The segregation rules also address the treatment of fully paid and excess margin securities, requiring specific procedures for their safekeeping.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. The core principle is to protect customer assets held by the member firm, not to cover losses due to market fluctuations or poor investment decisions. CIPF coverage is generally limited to a maximum amount per customer account, covering securities, cash, and other property held by the member firm. While CIPF aims to restore customers to the position they would have been in had the insolvency not occurred, this is subject to the limitations and conditions specified in the CIPF rules. CIPF does not cover losses resulting from fraudulent activities perpetrated by the client themselves, nor does it guarantee specific investment returns. In situations involving complex corporate structures, CIPF will look to the beneficial owner of the account when determining eligibility and coverage limits. The coverage provided is not unlimited; it is capped at a certain amount per eligible account.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. This protection is subject to certain limits and conditions. Specifically, CIPF covers losses of property held by a member firm on behalf of a customer, up to a limit of $1 million per customer account for general accounts and separate $1 million limit for registered accounts (e.g., RRSPs, TFSAs).

In this scenario, considering the CIPF coverage limits, even though the total loss across all accounts is $1,750,000, the recovery is limited by the per-account maximums. The customer has a general account with a $900,000 loss, which is within the $1 million limit, and a registered account with a $850,000 loss, also within the $1 million limit. Therefore, the customer will recover the full amount of the losses in both accounts. The total recovery will be the sum of the losses in the general and registered accounts.

Total Recovery = Loss in General Account + Loss in Registered Account
Total Recovery = $900,000 + $850,000 = $1,750,000

Segregation of client securities is a fundamental requirement for dealer members. CIRO rules mandate that firms must segregate client securities from their own proprietary securities to protect client assets in the event of the firm’s insolvency. This segregation must be meticulously documented and maintained, with accurate records of all client holdings. Firms must also conduct regular reconciliations to ensure that the physical securities held in safekeeping match the records of client holdings. Any discrepancies must be promptly investigated and resolved. The segregation requirements apply to all types of client securities, including those held in registered accounts such as RRSPs and TFSAs. The purpose of these rules is to ensure that client assets are readily identifiable and protected, regardless of the financial health of the dealer member. Failure to properly segregate client securities can result in severe sanctions, including fines, suspensions, and even the revocation of the firm’s registration.

Segregation of client assets is a fundamental principle in the securities industry, designed to protect client assets from being used to satisfy the firm’s own obligations. CIRO has strict rules regarding the segregation of client securities and cash. These rules require firms to maintain separate accounts for client assets and to ensure that these assets are not commingled with the firm’s own assets. Firms must also maintain detailed records of all client assets held in segregation and perform regular reconciliations to ensure accuracy. Deficiencies in segregation can have severe consequences, including regulatory sanctions and potential losses for clients. The CFO plays a crucial role in ensuring compliance with segregation rules, implementing appropriate internal controls, and promptly addressing any segregation deficiencies that may arise. Understanding the specific requirements for segregation, including the calculation of segregation requirements and the permissible locations for client assets, is essential for effective risk management and regulatory compliance.

Underwriting capital rules are designed to ensure that member firms have sufficient capital to cover the risks associated with underwriting new issues of securities. When a firm acts as an underwriter, it commits to purchasing a certain amount of the new issue from the issuer and then reselling it to the public. This process exposes the firm to various risks, including market risk (the risk that the price of the securities will decline before they can be sold), credit risk (the risk that the issuer will default on its obligations), and operational risk (the risk of errors or delays in the underwriting process). To mitigate these risks, CIRO imposes capital requirements on underwriting firms based on the size and nature of their underwriting commitments. These capital requirements are typically expressed as a percentage of the underwriting commitment and may be reduced over time as the securities are sold to the public.

Provider of capital concentration refers to the extent to which a firm relies on a single provider for its capital. High concentration can expose the firm to significant risk if that provider experiences financial difficulties or withdraws its support. The concentration test is used to assess the firm’s concentration of capital providers. The determination of counterparties is a key step in the concentration test, identifying the entities that are providing capital to the firm. Therefore, the most accurate answer is that high concentration can expose the firm to significant risk.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of insolvent member firms, within prescribed limits. This protection is crucial for maintaining investor confidence in the Canadian securities market. A key aspect of CIPF coverage is understanding what types of assets and accounts are protected. Generally, CIPF covers securities and cash held by a member firm on behalf of a customer. However, there are specific exclusions. One significant exclusion is for losses resulting from a decline in the market value of securities. CIPF protects against the loss of assets due to the insolvency of the member firm, not against investment losses due to market fluctuations. Furthermore, certain types of accounts, such as those held by directors or senior officers of the member firm, may have limited or no coverage.

In the given scenario, the client experienced a loss due to a market downturn. While the firm’s insolvency is a factor, the primary cause of the loss is the decline in the value of the investments themselves. CIPF is designed to protect against the disappearance of assets due to insolvency, not against market risk. Therefore, CIPF would not cover the losses stemming directly from the drop in market value. The CIPF coverage is limited to the amount of assets that were actually held by the firm at the time of insolvency, up to the CIPF coverage limits, and only if those assets are missing due to the firm’s insolvency, not due to market fluctuations.

Therefore, CIPF will only cover the assets held by the firm at the time of insolvency, not the market losses.

Underwriting capital rules are in place to mitigate the risks associated with underwriting new securities issues. When a firm underwrites a new issue, it commits to purchasing a certain amount of the securities, which exposes the firm to potential losses if the issue is not fully sold to the public. The underwriting capital rules require firms to maintain sufficient capital to cover these potential losses. The rules typically specify margin requirements for unsold portions of the new issue, which are reduced over time as the issue is sold. Out clauses in underwriting agreements allow the underwriter to withdraw from the agreement under certain circumstances, such as adverse market conditions. The availability of out clauses can affect the margin requirements for the underwriting. The rules also address situations where a firm acts as a non-lead member of an underwriting syndicate, specifying the capital requirements for its portion of the underwriting commitment.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. The key is understanding what assets are covered. CIPF coverage generally extends to securities, cash, and other property held by a member firm on behalf of a customer. However, it does *not* cover losses due to market fluctuations or declines in the value of investments. It also does not cover losses arising from unsuitable investment advice or fraudulent activities perpetrated by individuals *not* associated with the member firm. The coverage is specifically for assets held *by* the member firm that are missing due to insolvency. The $1 million limit is a *per account* limit, combining general and separate accounts, not per investment or per individual security. The CIPF also does not cover commodity futures contracts or foreign exchange contracts.

The Canadian Investor Protection Fund (CIPF) provides protection to eligible customers of member firms in the event of the firm’s insolvency. The key is understanding what is *not* covered. While CIPF covers securities, cash, and other property held by the member firm on behalf of the customer, it does *not* cover losses resulting from market fluctuations, unsuitable investments, or the negligence of the member firm. Moreover, coverage is generally limited to losses directly related to the insolvency of the member firm, not from other operational failures that do not lead to insolvency.

In this scenario, the key is whether the unauthorized trading led to the firm’s insolvency. If the firm remains solvent and able to meet its obligations despite the losses from the unauthorized trading, CIPF coverage would not apply. The client’s recourse would be through other channels, such as arbitration or legal action against the firm for negligence or breach of contract. CIPF is a last resort when the firm itself cannot fulfill its obligations due to insolvency.

The CIPF is designed to protect investors from the loss of assets held by a member firm in the event of the firm’s insolvency. It does not protect against losses due to market fluctuations or poor investment decisions, nor does it typically cover losses resulting from unauthorized trading unless that trading directly leads to the firm’s insolvency and inability to meet its obligations. In cases of unauthorized trading where the firm remains solvent, the investor’s recourse would be against the firm itself through legal or arbitration channels. The focus of CIPF is on the protection of assets held by the firm, not on insuring against all types of losses an investor might experience.