What is the role of the Canadian Investor Protection Fund (CIPF)?

What is the role of the Canadian Investor Protection Fund (CIPF)?

• A. To provide investment advice to clients
• B. To advocate for the investment industry
• C. To protect investors against dealer insolvency
• D. To regulate financial transactions in Canada

Answer: (C)

The Canadian Investor Protection Fund (CIPF) plays a crucial role in safeguarding the interests of investors by providing protection against the insolvency of dealers. Specifically, it protects investors in the event that a member firm goes bankrupt or is unable to fulfill its obligations to clients. This protection ensures that investors can recover their assets, such as cash and securities, up to a certain limit, thereby instilling confidence in the financial system.

This role is essential for maintaining trust in the investment industry, as it provides a safety net for investors when faced with the unexpected failure of a dealer. While the other options suggest various functions—such as providing investment advice, advocating for the industry, or regulating transactions—those are not the primary purpose of the CIPF. The fund's dedicated focus on investor protection sets it apart as a vital component of Canada’s financial safety framework.