(August 30, 1999) -- WHEN you open a stockbrokerage account, you're safeguarded by the Securities Investor Protection Corp. (SIPC). But what, exactly, are you covered for? Not as much as you think.

Investors are bringing lawsuits to challenge what they say is SIPC's stingy view of its duties. SIPC says it's doing what the law directs.

But SIPC's view of the law has been expanded before, both by courtroom decisions and pressure from the Securities and Exchange Commission. Maybe that could happen again.

On paper, SIPC's covenant appears straightforward. You're covered if your brokerage house fails and your cash or securities can't be found. Maybe your broker misappropriated your assets. Maybe its records don't mention all the stocks you own.

Either way, you're guaranteed most or all of your assets back.

SIPC covers you for up to $500,000 ($100,000 of which can be cash). The money comes from an industry-supported fund that currently tops $1.16 billion. Customer losses that exceed $500,000 might be paid from the assets, or private insurance policy, of the failed firm.

But what constitutes misappropriation? What proof do you need? And how should SIPC value the securities you lost?

You're not covered for losses you suffer if your stocks drop in price. Nor does SIPC cover fraud, but it covers theft. In some circumstances, you might also collect for losses due to unauthorized trading in your account.

Say, for example, that you're dealing with a dishonest firm that buys tiny stocks for pennies a share and then artificially raises the price. The broker purchases some of the stock for your account, without your consent.

Eventually, the brokerage firm's insiders sell and the stock keels over, leaving investors holding the bag. SIPC used to call that fraud and refuse to pay. But the SEC persuaded the commission to change its mind.

But even though these losses are now covered, it's almost impossible to collect, complains Indianapolis attorney Mark Maddox, president of the Public Investors Arbitration Bar Association.

Maddox is pursuing about 350 cases of unauthorized trading at the notorious penny-stock firm Stratton Oakmont that failed two years ago.

Investors have to be able to prove that the purchase was unauthorized. The proof SIPC wants, according to general counsel Stephen Harbeck: a copy of a letter that you sent to your broker within 10 days of getting confirmation of the trade.

That 10-day limit isn't in the SIPC law. It's in your brokerage agreement, and the fine print on the back of your confirmation statement.