The General Accounting Office in the U.S. has issued a report recommending better disclosure from the securities industry’s contingency fund.

The GAO wants to see improved investor awareness of the Securities Investor Protection CorporationÕs policies, practices, and coverage. It recommends that the SIPC chairman, as part of SIPCÕs ongoing effort to revise the informational brochure and website, include a full explanation of the steps necessary to document an unauthorized trading claim. It also recommends that SIPC revise the brochure to warn investors to exercise caution in ratifying potentially unauthorized trades in discussions with firm officials.

The Securities and Exchange Commission can take steps to improve the information it provides to investors about SIPC and about how to protect investor interests, says the GAO.

It recommends that the SEC chairman require SIPC member firms to provide the SIPC brochure to their customers when they open an account and encourage firms to distribute it to its existing customers more widely. Where appropriate , advise customers to promptly complain in writing when they believe trades in their account were not authorized, including an explanation of SIPCÕs policies and practices and warnings about how to avoid ratifying potentially unauthorized trades during telephone conversations.

The GAO says that SEC and the SROs should establish a uniform disclosure rule to require that clearing firms disclose on trade confirmations and/or other account statements about unauthorized trades in a timely manner. It should also require that firms which the SEC determines to have engaged or are engaging in systematic or pervasive unauthorized trading to promptly notify their customers about the importance of documenting disputed transactions in writing

Despite the focus on disclosure “the larger issue is whether the SIPC fund is adequate or coverage should be expanded to include other kinds of investor losses,” says the North American Securities Administrators Association.

“Our financial markets are vastly different today than they were when the SIPC was established three decades ago. Today nearly half of all households have money invested in the stock market, compared to roughly one in ten households in the early Seventies. Given these profound changes, we continue to believe that it’s time to take a good hard look at the SIPC`s role in protecting investors and ensuring continued faith in our markets and financial institutions.”