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1978-11-17

United States Court of Appeals for the District of Columbia Circuit

International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. National Right to Work Legal Defense

International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. National Right to Work Legal Defense, 590 F.2d 1139 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_14

imposes such burdens on the [Secretary of Labor] that Congress must either have intended [the Secretary’s] efforts to be supplemented by those of [the unions] or enacted a statute incapable of achieving its purpose.

Even if the unions are intended beneficiaries of section 203(b)(1), we have “not the slightest reason to think that” the section “

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

yield to clear contrary evidence of legislative intent,

This principle of statutory construction reflects an ancient maxim — expressio unius est exclusio alterius. Although the Court carefully stated that the expressio unius principle would “

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_7

must be consistent . with the effectuation of the purposes intended to be served by the Act.

Although the Court carefully stated that the expressio unius principle would “yield to clear contrary evidence of legislative intent,” id. at 458, 94 S.Ct. at 693, Amtrak clearly indicates that in cases where a statute provides only for a public or very narrow private cause of action, there is at least a rebuttable presumption that the legislature did not intend to grant a general, private enforcement cause of action. In addition to the expressio unius and legislative intent criteria, the Court in 4m-trak also stated that the implication of a private cause of action “must be consistent. with the effectuation of the purposes intended to be served by the Act.

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_24

have an implied private right of action under the Securities Investor Protection Act of 1970

Amtrak, supra, 414 U.S. at 458, 94 S.Ct. at 693. In SIPC, the Court framed the issue as whether customers of a financially troubled securities broker “

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_24

to exercise its statutory authority for their benefit.

In SIPC, the Court framed the issue as whether customers of a financially troubled securities broker “have an implied private right of action under the Securities Investor Protection Act of 1970” to compel the Securities Investor Protection Corporation “

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_4

ordinarily implies that no other means of enforcement was intended by the Legislature.

Id. at 413-14, 95 S.Ct. at 1735. The Act expressly provided for such enforcement actions by the SEC. The Court held that the Act did not imply a private cause of action for enforcement of its terms. Most significantly, the Court reaffirmed that the express provision for a public cause of action “

1978-09-18

United States Court of Appeals for the Ninth Circuit

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission

Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Commission, 588 F.2d 1216 (1978)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

clear contrary evidence of legislative intent.

Id. at 82-83 n.14, 95 S.Ct. at 2090. This suggestion, however, apparently conflicts with Amtrak’s teaching that this inference is operative unless contradicted by “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

‘plenary authority’ to supervise the SIPC.

Id. (citing 15 U.S.C. § 78ggg(c)). The Supreme Court held in Securities Investor Protection Corporation v. Barbour, 421 U.S. 412, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975), that SIPA invests the SEC with “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC,

Even more significantly, “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

requiring SIPC to discharge its obligations under [SIPA] and for such other relief as the court may deem appropriate to carry out the purposes of [SIPA].

Even more significantly, “[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC,” SIPA authorizes the SEC to seek a court order “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

‘plenary authority’ to supervise the SIPC,

This case is also distinguishable from LTV Corp. and Velazquez because the SEC — the agency with “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_5

nonprofit, private membership corporation to which most registered brokers and dealers are required to belong.

Black's Law Dictionary 1180 (7th ed.1999) (explaining that, in a Ponzi scheme, "[mjoney from the new investors is used directly to repay or pay interest to old investors, usually without any operation or revenue-producing activity other than the continual raising of new funds”); see also United States v. Moloney, 287 F.3d 236, 242 (2d Cir.), cert. denied, 537 U.S. 951, 123 S.Ct. 416, 154 L.Ed.2d 297 (2002). Formed pursuant to SIPA, SIPC is a "

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

‘plenary authority’ to supervise the SIPC.

Id. (citing 15 U.S.C. § 78ggg(c)). The Supreme Court held in Securities Investor Protection Corporation v. Barbour, 421 U.S. 412, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975), that SIPA invests the SEC with “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC,

Even more significantly, “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

requiring SIPC to discharge its obligations under [SIPA] and for such other relief as the court may deem appropriate to carry out the purposes of [SIPA].

Even more significantly, “[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC,” SIPA authorizes the SEC to seek a court order “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

‘plenary authority’ to supervise the SIPC,

This case is also distinguishable from LTV Corp. and Velazquez because the SEC — the agency with “

2004-06-08

United States Court of Appeals for the Second Circuit

In re New Times Securities Services, Inc.

In re New Times Securities Services, Inc., 371 F.3d 68 (2004)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_5

nonprofit, private membership corporation to, which most registered brokers and dealers are required to belong.

Black’s Law Dictionary 1180 (7th ed.1999) (explaining that, in a Ponzi scheme, "[mjoney from the new investors is used directly to repay or pay interest to old investors, usually without any operation or revenue-producing activily other than the continual raising of new funds”); see also United States v. Moloney, 287 F.3d 236, 242 (2d Cir.), cert. denied, 537 U.S. 951, 123 S.Ct. 416, 154 L.Ed.2d 297 (2002). Formed pursuant to SIPA, SIPC is a "

2005-09-22

United States Bankruptcy Court for the Western District of New York

In re Vision Investment Group, Inc.

In re Vision Investment Group, Inc., 330 B.R. 358 (2005)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit.

Although Jurgen-smeyer originally filed a claim for a loss in the amount of $950,513.50, he now agrees that any priority entitlement is limited to $100,000.00, that being the statutory cap established under 15 U.S.C. § 78fff-3(a)(1). In objecting to the Jurgensmeyer claim, SIPC argues that the claimant does not qualify as a customer of the debtor. Rather, SIPC contends that the debtor acted as a mere “introducing broker,” within a fully disclosed relationship in which Cantella & Co., Inc., performed the duties of a clearing broker. Asserting that Vision did not receive, acquire or hold investor securities or cash, SIPC argues that the only relevant customer relationship involved Cantella, not Vision. With no evidence of any unlawful conversion or sale by Vision, SIPC believes that no customer liability derives through the debtor. In response, the holder of the Jurgen-smeyer claim contends that customer protection depends not upon the clearing status of a brokerage firm, but on the nature of the claim and the purpose of the account. The claimant argues that pursuant to 17 C.F.R. § 300.501(a), an authorized securities sale is deemed to have occurred upon the broker’s transmission of a written confirmation of sale to the customer. Having received such a written confirmation, Jurgensmeyer believes that he possesses a customer claim for cash as compensation for losses derived from the failure to complete the sale according to instruction. Unfortunately, both parties rely upon citations to cases that do not involve the particular circumstance in which an aggrieved client had already recovered his shares of stock prior to a proceeding under SIPA. In my view, the court need not consider either the trustee’s argument about distinctions between introducing and clearing brokers, or the claimant’s argu ment about the consequences of a written confirmation of sale. Congress established SIPC for the purpose “

2007-05-29

United States Court of Appeals for the Third Circuit

Peloro v. United States

Peloro v. United States, 488 F.3d 163 (2007)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

The Securities Investor Protection Corp. (SIPC) was established by Congress as a nonprofit membership corporation for the purpose, inter alia, of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit.

Because there was no dispute as to the fact that the certificated securities had been transferred by the federal defendants to R.H. and/or the Trustee more than six years before Ms. Peloro filed suit under Rule 41(g), the District Court was within its discretion to determine these facts without a hearing, and the determination of these facts satisfied its responsibility under Chambers. Further, having made this determination, the District Court correctly concluded that — because the federal defendants could neither return the securities nor be sued for money damages under Rule 41(g) — no set of provable facts existed under which Ms. Peloro would be entitled to a remedy. The District Court therefore properly dismissed Ms. Peloro’s Rule 41(g) claim against the federal defendants. V. For the reasons stated, we will affirm the District Court’s October 14, 2004 order granting the Trustee’s and R.H.’s motions for summary judgment, granting the federal defendants’ motion to dismiss, and dismissing all claims with prejudice. 1 . Ms. Peloro is also referred to in the record as Filomena Peloro del Olmo or Filomena P. del Olmo. For consistency, we refer to her throughout as "Peloro” or “Ms. Peloro.” 2 . Since the Ashland GA URFA 8% "customer name security” was ultimately returned to Ms. Peloro, see text infra, the disposition of that security was not at issue in her claims before the District Court, nor is it in issue on this appeal. "

1985-09-23

United States Bankruptcy Court for the Central District of California

In re Gibralco, Inc.

In re Gibralco, Inc., 53 B.R. 324 (1985)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_29

Following a period of great expansion in the 1960’s, the securities industry experienced a business contraction that led to the failure or instability of a significant number of brokerage firms. Cus tomers of failed firms found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings. In addition to its disastrous effects on customer assets and investor confidence, this situation also threatened a 'domino effect' involving otherwise solvent brokers that had substantial open transactions with firms that failed. Congress enacted the SIPA to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers. S Rep No. 91-1218, pp 2-4 (1970); HR Rep No. 91-1613, pp 2-4 (1970).

On July 9, 1981, Bonanno delivered an aggregate of $100,000 par value Pasadena Redevelopment Agency bonds at 7.2% due 11/01/2005 (the “$100,000 Pasadena bonds”) to Grayson personally pursuant to a written “Bond Swap Agreement” prepared by Bonanno and signed by Bonanno and Grayson. A copy of this “Bond Swap Agreement” is attached to this Memorandum of Decision as Appendix A. 2. The $100,000 Pasadena bonds were never deposited by Grayson into Bonanno’s account at Gibralco; and Bonanno never received any document from Gibralco acknowledging receipt of these bonds. 3. On July 30, 1981, the $100,000 Pasadena bonds were deposited by Grayson with Gibralco in the S.R. Grayson account. On trade date July 16, 1981, the $100,000 Pasadena bonds were sold by Grayson through the S.R. Grayson account for a net amount of $54,490. Said $54,490 was subsequently paid by Gibralco to S.R. Grayson. 4. On September 4, 1981, Bonanno delivered an additional $50,000 par value Pasadena Redevelopment Agency bonds at 7.2% due 11/01/2005 (the “$50,000 Pasadena bonds”) to Grayson personally pursuant to an amendment appearing at the bottom of the written “Bond Swap Agreement”. The amendment was prepared by Bonanno and signed by Bonanno and Gray-son. 5. The $50,000 Pasadena bonds were never deposited by Grayson into Bonanno’s account at Gibralco and Bonanno never received any document from ■ Gibralco acknowledging receipt of these bonds. 6. On September 4, 1981, the $50,000 Pasadena bonds were deposited by Grayson with Gibralco in the S.R. Grayson account. On trade date August 25, 1981, for settlement date September 1, 1981, the $50,000 Pasadena bonds were sold by Grayson through the S.R. Grayson account for a net amount of $25,825. Said $25,825 was subsequently paid by Gibralco to S.R. Grayson. “Following a period of great expansion in the 1960’s, the securities industry experienced a business contraction that led to the failure or instability of a significant number of brokerage firms.

1985-09-23

United States Bankruptcy Court for the Central District of California

In re Gibralco, Inc.

In re Gibralco, Inc., 53 B.R. 324 (1985)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

restore investor confidence in the capital markets

Courts should endeavor to give statutory language that meaning that nurtures the policies underlying the legislation. One of the objectives of SIPA was to “

1977-12-21

United States District Court for the District of Connecticut

Alexander v. Yale University

Alexander v. Yale University, 459 F. Supp. 1 (1977)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_4

express statutory provision for one form of proceeding ordinarily implies that no other means of enforcement was intended by the Legislature

It naturally has been suggested that such Title VI cases have been against “public” defendants and therefore strictly rest on the Civil Rights Act’s grant of the right to sue for a deprivation under color of state law “of any rights... secured by the Constitution and laws”, 42 U.S.C. § 1983, see Cannon, supra at 1083. If so, it could hardly be a principled distinction that one student would be at Yale and another at the University of Connecticut; if the state college student can secure judicial relief under § 1983, the more reason to imply a suit right for the identically situated private university student, cf. Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). While the Supreme Court has remarked that “

1995-06-15

United States Bankruptcy Court for the District of New Jersey

Barton v. Securities Investor Protection Corp.

Barton v. Securities Investor Protection Corp., 182 B.R. 981 (1995)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_29

‘domino effect’ involving otherwise solvent brokers that had substantial open transactions with firms that failed.

Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2552. In this ease, the material facts are undisputed. The parties agree that plaintiff paid $3,140 for 10,000 shares of CCRS on November 22, 1988. The parties also agree that on March 23, 1989 plaintiff asked Mr. Zuliani of Monmouth to sell the 10,000 shares at U/isths per share for a total price of $19,375. The parties further agree that SSC did not execute that sale; and that on April 18,1989 the 10,000 CCRS shares were sold for $3,467. The only issue that remains is whether, as a matter of law, SIPA’s customer protection provisions entitle plaintiff to $3,467, the amount the shares yielded on April 18, 1989, or whether plaintiff is entitled to $19,375, the amount which the shares would have yielded on March 23, 1989. Securities Investor Protection Act The Securities Investor Protection Act of 1970, as amended, 15 U.S.C. § 78aaa et seq. (“SIPA”), was passed by Congress in 1970 in the wake of the collapse of several brokerage houses in the late 1960’s. In re Brentwood Securities, Inc. The purpose of SIPA was to restore investor confidence in securities markets and prevent the “

2010-08-18

United States Bankruptcy Court for the Southern District of New York

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.)

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.), 435 B.R. 866 (2010)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_23

designed to accomplish the completion of open transactions and the speedy return of most customer property.

Thus, nothing in any SEC rules or regulations, or the No Action Letters interpret ing them or in the Form BDW purports to deprive a broker-dealer of the right to transfer management of accounts in return for compensation, either before or after a Form BDW is filed. Instead, as at least the Merit Fin. Corp. No Action Letter, 1989 WL 246655, at *1, implies, compensation for such a transfer after, or contemporaneously with, a Form BDW filing is appropriate. S.W. Bach did not abandon or forfeit its customer accounts when it filed the Form BDW as AGI alleges; instead, within the sixty day period following its filing of the Form BDW, it had a right to withdraw its request to terminate its registration and the termination was not effective for sixty days following the filing date. Furthermore, the timing of the filing of the Form BDW here should not allow the parties to game the system and deprive S.W. Bach’s creditors of the value of the right to manage the Accounts that were transferred to AGI without consideration. AGI’s argument that S.W. Bach suddenly lost the rights to the Accounts the minute the Form BDW was filed would result in a forfeiture of potentially valuable rights which the Trustee seeks to monetize for the benefit of creditors. Such a serious forfeiture of valuable rights is not favored and should not be found absent clear language in applicable rules or regulations, (iii) A SIPA liquidation proceeding generally is “

2010-08-18

United States Bankruptcy Court for the Southern District of New York

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.)

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.), 435 B.R. 866 (2010)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_29

[cjustomers of failed firms found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings. In addition to its disastrous effects on customer assets and investor confidence, this situation also threatened a ‘domino effect’ involving otherwise solvent brokers that had substantial open transactions with firms that failed.

Prior to SIPA’s enactment, “[cjustomers of failed firms found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings.

2010-08-18

United States Bankruptcy Court for the Southern District of New York

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.)

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.), 435 B.R. 866 (2010)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

Congress enacted the SIPA to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

Thus, “

2010-08-18

United States Bankruptcy Court for the Southern District of New York

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.)

Togut v. RBC Dain Correspondent Services (In re S.W. Bach & Co.), 435 B.R. 866 (2010)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_9

trustee for the liquidation of the business of the debtor

The court is then required to appoint a “

1995-08-10

United States Court of Appeals for the Sixth Circuit

Appleton v. First National Bank of Ohio

Appleton v. First National Bank of Ohio, 62 F.3d 791 (1995)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

Congress enacted the [Securities Investor Protection Act] to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

Defendants are two banks, First National Bank of Ohio and Bank One, Akron, N.A., at which First Ohio Investment maintained accounts into which funds designated for investment by FOSC were deposited. The trustee seeks to recover the wrongfully diverted funds from the banks, and proceeds in two distinct capacities. First, standing in the shoes of FOSC, the payee on checks and wire transfers deposited into First Ohio Investment’s accounts, the trustee asserts claims of conversion and negligence against the banks. First National’s alleged liability on these claims is $6 million, and Bank One’s alleged liability is $204,000. Second, proceeding on behalf of the Securities Investor Protection Corporation as the equitable subrogee of customers who delivered to FOSC checks made payable to third parties, the trustee claims that the banks must repay the amount of those checks because they too were wrongfully deposited into an First Ohio Investment account. First National’s alleged liability here is $175,000, and Bank One’s alleged liability is $1900. The district court entered summary judgment against the trustee on both claims. The court held, first, that Gilmartin’s operation of FOSC and First Ohio Investment as essentially one entity made the two entities alter egos, barring the trustee’s claims which were asserted on FOSC’s behalf; and, second, that there is no right of subrogation to the claims of customers against parties other than the estate of the investment firm which is in liquidation. The trustee appeals both determinations. We reverse. I. As recounted by the Supreme Court, the history of the Securities Investor Protection Act dates back to the 1960s, when the securities industry experienced a business contraction that led to the failure or instability of numerous brokerage firms. Customers of these failed broker-dealers found their cash or securities on deposit dissipated or tied up in lengthy bankruptcy proceedings. “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_12

found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings,

In support of its Application, the SEC has filed an Ex Parte Motion for an Order to Show Cause why SIPC should not be ordered to file an application in the Texas federal court with respect to the Stanford Group Company. (Dkt. No. 2). SIPC, in turn, has filed a Motion to Strike the Ex Parte Motion for an Order to Show Cause. (Dkt. No. 3). SIPC also requests that this Court convene a case management conference pursuant to Fed.R.CivP. 16. Id. This matter is before the Court for resolution of the SEC Motion for an Order to Show Cause and the SIPC Motion to Strike. I. BACKGROUND This case is an outgrowth of the 2009 collapse of a group of companies owned or controlled by Robert Allen Stanford. Stanford allegedly sold more than $7 billion worth of certificates of deposit (“CDs”) that were issued by the Stanford International Bank, Ltd. (“SIBL”), an Antiguan bank. The CDs were marketed by the Stanford Group Company (“SGC”), a now-defunct broker-dealer that was registered with the SEC and that was a member of SIPC. The SEC contends that Stanford actually misappropriated billions of dollars and operated a fraudulent “Ponzi scheme” in which obligations of the CDs were paid using the proceeds from the sale of new CDs rather than from earnings, liquid assets or reserves. Following an investigation, the SEC brought a civil enforcement action against Stanford and his entities in the Texas federal court. Federal prosecutors have also brought criminal charges against Stanford in that court. The Texas federal court has appointed a Receiver to oversee the assets of SGC and other Stanford entities. The Receiver reports that, as of February 2009, SGC had approximately 32,000 active accounts for which it acted as the introducing broker. When Congress passed the SIPA, it sought to protect customers of failed broker-dealers who “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_29

disastrous effects on customer assets and investor confidence ....

When Congress passed the SIPA, it sought to protect customers of failed broker-dealers who “found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings,” leading to “disastrous effects on customer assets and investor confidence....

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_23

liquidation proceeding, applicable only to member firms, designed to accomplish the completion of open transactions and the speedy return of most customer property.

SIPC v. Barbour, 421 U.S. 412, 415, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975). Congress created SIPC, a non-profit, private membership corporation to which most broker-dealers registered with the SEC, including SGC, are required to join. SIPC members pay assessments, and when SIPC member firms encounter financial difficulties, SIPC has the authority to commence a “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed to meet its obligations to customers,

1 Alan N. Resnick & Henry J. Sommer, Collier on Bankruptcy ¶ 12.02[l][a] at 12-9 (16th ed.2011). The trustee would then evaluate each claim, and the claimant could appeal a denial of payment by the trustee to the bankruptcy court, and either the trustee or the claimant could appeal the ruling of the bankruptcy court, and so on. Id. at ¶¶ 12.11-12.16. In this case, SIPC has declined to file an application for a protective decree for the SGC customers in the Texas federal court — the court which would have jurisdiction over the liquidation proceeding. SIPC has apparently concluded that the SGC customers are not covered by the statute because, among other grounds, SGC did not perform a custody function for the customers who purchased the SIBL CDs. (Dkt. No. 3 at 2-3). According to SIPC, the SEC shared this conclusion from sometime in 2009 until June 2011 when the SEC “abruptly reversed course.” Id. at 3. This timing allegedly corresponds with a threat of a United States Senator to interfere with the confirmations of two SEC commissioners unless the SEC revisited the issue of SIPC protection for the SGC customers. On June 15, 2011, the SEC delivered a formal analysis to SIPC (“SEC Analysis”) arguing that SGC “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

the Commission may apply to the district court

On June 15, 2011, the SEC delivered a formal analysis to SIPC (“SEC Analysis”) arguing that SGC “has failed to meet its obligations to customers,” that the SGC customers were in need of the protections of the SIPA, and that SIPC should seek to commence a liquidation proceeding. Id. at 3; Dkt. No. 1-3 at 2. SIPC has advised the SEC that it has considered the SEC Analysis, that it disagrees with the SEC, and that it will not seek to commence a liquidation proceeding. The SIPA gives the SEC authority to seek to compel SIPC to file an application for a protective decree when the SEC believes that SIPC is failing to discharge its obligations under the statute. As set forth in the statute: In the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC, the Commission may apply to the district court of the United States in which the principal office of SIPC is located for an order requiring SIPC to discharge its obligations under this chapter and for such other relief as the court may deem appropriate to carry out the purposes of this chapter. 15 U.S.C. § 78ggg(b). By its application to this Court, the SEC seeks to exert this statutory authority over SIPC. Both the SEC and SIPC advise the Court that this is the first instance in the 42 years since SIPA was enacted that the SEC has filed such an application. Thus, this is a matter of first impression. II. The SEC contends that because the statute states that “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

the Commission may apply to the district court of the United States ... for an order requiring SIPC to discharge its obligations under this chapter and for such other relief as the court may deem appropriate....

See 11 U.S.C. §§ 107(a)(4), 107(f)(4) (1958 edition of the United States Code, available at www. heinonline.org). Thus, the intent to allow summary proceedings was explicitly conveyed in the language of the example statute. Here, the statute provides that “the Commission may apply to the district court of the United States... for an order requiring SIPC to discharge its obligations under this chapter and for such other relief as the court may deem appropriate....”

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_17

seeking] in district court to compel the SIPC,

15 U.S.C. § 78eee(b)(l)(D). As the SEC notes, the purpose of SIPA is to allow a prompt, summary proceeding when a protective decree is sought in order to protect the customers of the troubled SIPC member. This salient purpose would be frustrated if this Court were to hold that the statute mandated a lengthy, full-blown plenary proceeding to resolve a dispute between the SEC and SIPC over whether an application for a protective decree should be filed in the first instance. SIPC places great weight on the Supreme Court’s use of the word “action” to describe the means by which the SEC could proceed against SIPC. See Barbour, 421 U.S. at 421 & n. 3, 95 S.Ct. 1733. SIPC argues that Barbour therefore supports the contention that Congress intended that applications filed by the SEC against SIPC proceed as plenary actions. This Court disagrees. First and foremost, the issue before the Supreme Court in Barbour was whether the customers of SIPC members had an implied right to compel SIPC to file an application for a protective decree. Id. at 413-14, 95 S.Ct. 1733. Moreover, the Supreme Court was far from consistent in its dictum, because it also described a potential filing by the SEC as “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_21

enforcement by [the SEC] in court of the obligations imposed upon [SIPC],

Moreover, the Supreme Court was far from consistent in its dictum, because it also described a potential filing by the SEC as “seeking] in district court to compel the SIPC,” id. at 418, 95 S.Ct. 1733, and as “

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC, the Commission may apply to the district court ... for an order requiring SIPC to discharge its obligations under this chapter....

” (Dkt. No. 2 at 7). The statute provides that “[i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC, the Commission may apply to the district court... for an order requiring SIPC to discharge its obligations under this chapter....”

2012-02-09

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 842 F. Supp. 2d 321 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to customers,

Notwithstanding the fact that this statute might appear to be written to grant SIPC unilateral authority to “determine” whether a SIPC member “

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

of ‘plenary authority’ to supervise the SIPC[,]

MEMORANDUM OPINION AND ORDER ROBERT L. WILKINS, District Judge. Instead, the Court held that Congress granted the Securities and Exchange Commission (“SEC”) the role “

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_17

seek in district court to compel the SIPC ‘to commit its funds or otherwise to act for the protection’ of such customers.

Instead, the Court held that Congress granted the Securities and Exchange Commission (“SEC”) the role “of ‘plenary authority’ to supervise the SIPC[,]” which includes the statutory authority to “

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed to meet its obligations to customers,

Stanford allegedly sold over $7 billion worth of certificates of deposit (“CDs”) that were issued by the Stanford International Bank, Ltd. (“SIBL”), an Antiguan bank. The CDs were marketed by the Stanford Group Company (“SGC”), a now-defunct broker-dealer that was registered with the SEC and that was a member of SIPC. The SEC contends that Stanford actually misappropriated billions of dollars and operated a fraudulent “Ponzi scheme” — in which obligations of the CDs were paid using the proceeds from the sale of new CDs rather than from earnings, liquid assets or reserves. Following an investigation, the SEC brought a civil enforcement action against Stanford and his entities in the Texas federal court. Federal prosecutors have also brought criminal charges, and on March 6, 2012 a jury in the Texas federal court convicted Stanford of conspiracy, wire fraud, mail fraud, obstruction of justice and money laundering. U.S. v. Robert Allen Stanford, 09-cr-00342 (S.D.Tx.), Dkt. No. 808. On June 14, 2012, Stanford was sentenced to 1,320 months (110 years) in prison. Id., Dkt. No. 878. The Texas federal court has appointed a Receiver to oversee the assets of SGC and other Stanford entities. The Receiver reports that as of February 2009, SGC had approximately 32,000 active accounts for which it acted as the introducing broker. In early 2009, the Receiver asked SIPC to review whether the SGC customers who were allegedly defrauded were entitled to protection from SIPC. SIPC has declined to file an application for a protective decree for the SGC customers in the Texas federal court — the court which would have jurisdiction over the liquidation proceeding. On June 15, 2011, the SEC delivered a formal analysis to SIPC (“SEC Analysis”) arguing that SGC “

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

applying] to the district court ... for an order requiring SIPC

To answer these questions, this Court will observe the recent admonition of our Circuit Court to “heed Professor Frankfurter’s timeless advice: ‘(1) Read the statute; (2) read the statute; (3) read the statute!’ ” Kellmer v. Raines, 674 F.3d 848, 850 (D.C.Cir.2012) (quoting Henry J. Friendly, Mr. Justice Frankfurter and the Reading of Statutes, in Benchmarks 196, 202 (1967)). Heeding this sage advice, the Court turns to the words of the statute. The SIPA provision at issue reads as follows: In the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC, the Commission may apply to the district court of the United States in which the principal office of SIPC is located for an order requiring SIPC to discharge its obligations under this chapter and for such other relief as the court may deem appropriate to carry out the purposes of this chapter. Thus, the SIPA statute clearly specifies that the SEC must proceed by “applying] to the district court... for an order requiring SIPC” to comply with the statute.

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

refus[ed] ... to commit its funds or otherwise to act for the protection of customers of any member of SIPC.

While a strong argument could be made that the current application by the Commission, brought pursuant to 15 U.S.C. § 78ggg(b), seeking an order compelling SIPC to comply with the requirements of the SIPA statute, is really the same as an application brought by the Commission pursuant to 15 U.S.C. § 78u(e)(l) to enforce the 1934 Act, the Court need not reach that issue today. It shall suffice for present purposes to hold that Savoy and the related authority pursuant to the 1934 Act compel the conclusion that the preponderance standard is the appropriate burden for the Commission to bear to obtain the relief sought in the present Application pursuant to 15 U.S.C. § 78ggg(b). This result seems particularly sound not only because Congress has directed that SIPA be construed as if it were a part of the 1934 Act, but also because of the preference for the preponderance standard in civil litigation generally. See Herman & MacLean v. Huddleston, 459 U.S. 375, 387-91, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983) (holding that the preponderance of evidence standard is generally appropriate in a civil action brought by a private plaintiff to adjudicate violations of the 1934 Act). In addition, the Court is mindful that SIPC, a corporate body, is entitled to due process in the present proceeding, even if the SEC is considered to be its plenary supervisor under the SIPA statutory scheme. It is quite clear that the initiation of a SIPA liquidation would potentially involve tens of thousands of claimants and entail millions of dollars in administrative costs, even if all of the claims were ultimately denied. Accordingly, the SEC has the burden of proving, by a preponderance of the evidence, that SIPC has “refus[ed]... to commit its funds or otherwise to act for the protection of customers of any member of SIPC.

2012-07-03

United States District Court for the District of Columbia

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 872 F. Supp. 2d 1 (2012)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

refus[ed] ... to commit its funds or otherwise to act for the protection of customers of any member of SIPC.

Such further expansion is particularly inappropriate where SGC processed the CD sales at issue using a clearing broker, thereby minimizing the risks sought to be protected by the SIPA statute and operating in a manner that has caused the SEC to maintain for 30 years that the clients of an introducing broker are customers of the clearing broker for purposes of SIPA. Nor is the Court swayed by the SEC’s argument that some of the CD sales proceeds were used to pay expenses of SGC and that some of the investors were told that the CDs were protected by SIPA. Those assertions, even if true, run too far afield from the key issue, which is whether the investor entrusted cash to SGC for the purpose of effecting a securities transaction. In sum, the interpretation sought by the SEC is extraordinarily broad and would unreasonably contort the statutory language. Conclusion The Court is truly sympathetic to the plight of the SGC clients who purchased the SIBL CDs and now find themselves searching desperately for relief. Robert Allen Stanford’s 110 year sentence may bring some measure of justice to the SGC clients, but it will not make them financially whole. For the foregoing reasons, the SEC has failed to meet its burden, by a preponderance of the evidence, of proving that SIPC has “refus[ed]... to commit its funds or otherwise to act for the protection of customers of any member of SIPC.

2015-02-20

United States Court of Appeals for the Second Circuit

Securities Investor Protection Corp. v. 2427 Parent Corp.

Securities Investor Protection Corp. v. 2427 Parent Corp., 779 F.3d 74 (2015)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

plenary authority to supervise the SIPC,

Id. at 235. Instead, we upheld as a matter of law the Trustee’s determination that net equity should be calculated by the amount that a customer deposited into his or her BLMIS account, less any amount that he or she withdrew from the account. Id. at 233, 236-42 & 238 n. 7. We declined to address, however, whether the calculation of net equity should be adjusted to account for inflation or interest, because the Bankruptcy Court had not yet addressed the issue. Id. at 235 n. 6. Afterward, the Trustee and the SIPC argued to the Bankruptcy Court that SIPA does not permit adjustments for inflation or interest to customers’ net equity claims. The Securities and Exchange Commission (“SEC”), which has “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_18

failure or instability of a significant number of brokerage firms.

In this case, the Securities and Exchange Commission seeks a court order compelling SIPC to liquidate a member broker-dealer, Stanford Group Company (SGC). SGC played an integral role in a multibillion-dollar financial fraud carried out through a web of companies. SGC’s financial advisors counseled investors to purchase certificates of deposit from an Antiguan bank that was part of the same corporate family. The Antiguan bank’s CDs eventually became worthless. The massive Stanford fraud spawned a variety of legal actions in a number of arenas, the bulk of which are not at issue here. This case involves the authority of a specific entity — SIPC—to take measures within its own statutorily bounded sphere. As to that issue, because the Antiguan bank, unlike SGC, was not a SIPC member, SIPC had no ability to initiate measures directly against the bank to protect the property of investors who purchased the bank’s CDs. The question in this case is whether SIPC can instead be ordered to proceed against SGC — rather than the Antiguan bank — to protect the CD investors’ property. It is common ground that SIPC can be compelled to do so only if those investors qualify as “customers” of SGC within the meaning of the governing statute. SIPC concluded that they do not, and the district court agreed. The court reasoned that the investors obtained the Antiguan bank’s CDs by depositing funds with the bank itself, not with SGC, and they thus cannot be considered customers of the lat ter. We therefore affirm the denial of the application to order SIPC to liquidate SGC. I. A. In 1970, Congress enacted the Securities Investor Protection Act (the Act or SIPA) in response to the “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_12

found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings.

” Before the Act, customers of a brokerage firm that fell into insolvency often “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

for the purpose, inter alia, of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit.

” The Act created SIPC, a nonprofit, private membership corporation established “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_31

is in or is approaching financial difficulty.

” Id. at 413, 95 S.Ct. 1733; see 15 U.S.C. § 78ccc(a)(l). Congress required most registered U.S. broker-dealers to become members of SIPC and to pay assessments used to fund SIPC’s investor protection measures. The Act requires the SEC and various industry self-regulatory organizations to notify SIPC upon learning that a SIPC-member firm “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to customers.

” SIPC may file an action for a protective decree in federal district court after determining, among other things, that the member firm “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

plenary authority to supervise ... SIPC

” 15 U.S.C. § 78eee(a)(3)(A). If the court grants SIPC’s application, the court must appoint a trustee and order the proceedings removed to bankruptcy court. 15 U.S.C. § 78eee(b)(3), (4). The trustee then oversees the liquidation of the member firm, returning any customer cash and securities on deposit with the broker. 15 U.S.C. § 78fff. If the insolvent broker’s funds prove inadequate to pay all customer claims, SIPC itself must cover any shortfalls up to statutory limits. The Act gives the SEC “plenary authority to supervise... SIPC” in its implementation of the statute.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_8

may disapprove in whole or in part any bylaw or rule adopted by the Board of Directors of ... SIPC, or require the adoption of any rule it deems appropriate.

The Act gives the SEC “plenary authority to supervise... SIPC” in its implementation of the statute. For instance, the SEC “may disapprove in whole or in part any bylaw or rule adopted by the Board of Directors of... SIPC, or require the adoption of any rule it deems appropriate.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_32

participate in any liquidation proceeding initiated by ... SIPC.

The SEC may also “participate in any liquidation proceeding initiated by... SIPC.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_24

act for the protection of [SGC] customers.

The court also adopted SIPC’s view that a preponder-anee-of-the-evidence standard applies in § 78ggg(b) proceedings, id. at 5, but it concluded that the evidentiary standard ultimately did not matter because the case turned on “uncontested facts and an interpretation of law,” id. at 12. II. That provision comes into play only if SIPC has failed to “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to customers

15 U.S.C. § 78ggg(b) (emphasis added); see also 15 U.S.C. § 78eee(a)(3)(A) (authorizing SIPC to file an application to liquidate only if it determines that the member broker “

2015-06-29

United States Court of Appeals for the Second Circuit

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros.

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros., 791 F.3d 277 (2015)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_18

a business contraction [in the securities industry] that led to the failure or instability of a significant number of brokerage firms.

Doral promptly objected to the Trustee’s denial, but shortly thereafter transferred its claims to CVF Lux Master S.a.r.l. pursuant to Federal Rule of Bankruptcy Procedure 3001. CVF Lux Master S.a.r.l. is managed by CarVal Investors UK Limited (“CarVal”), the appellant in this case. On June 25, 2013, the bankruptcy court (Peck, Bk. J.) affirmed the Trustee’s determination that the repos did not make Doral or CarVal a customer under SIPA. In re Lehman Bros. Inc., 492 B.R. 379 (Bankr.S.D.N.Y.2013). CarVal appealed the bankruptcy court’s decision to the district court. On February 26, 2014, the district court (Cote, J.) affirmed the bankruptcy court. In re Lehman Bros. Inc., 506 B.R. 346 (S.D.N.Y.2014). DISCUSSION This appeal turns on a single issue: was Doral a “customer” of Lehman for purposes of SIPA? If Doral was a customer of Lehman, then under SIPA the appellant is entitled to the prompt return of any property that Lehman was holding on Dorals behalf—i.e., the securities that Lehman never resold to Doral as required by the repurchase agreements, less the contractual repurchase price. Conversely, if Doral was not a customer of Lehman, then the SIPA door is closed, and the appellant is relegated to pursuing a claim for those unreturned securities in the ordinary course of Lehman’s bankruptcy proceedings. We begin our analysis of this question by first reviewing the principles articulated by our SIPA caselaw. We then turn to how these principles treat repurchase agreements. We conclude by addressing (1) the appellant’s reliance on Matter of Bevill, Bresler & Schulman Asset Mgmt. Corp. (Cohen v. Army Moral Support Fund), 67 B.R. 557 (D.N.J.1986), and (2) the appellant’s contention that Congress spoke to the treatment of repos in various statutes enacted since SIPA’s passage. The Securities Investor Protection Act of 1970 Congress enacted SIPA in 1970 in response to “

2015-06-29

United States Court of Appeals for the Second Circuit

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros.

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros., 791 F.3d 277 (2015)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_29

situation ... threatened a ‘domino effect’ involving otherwise solvent brokers that had substantial open transactions with firms that failed.

” Sec. Investor Prot. Corp. v. Barbour, 421 U.S. 412, 415, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975). These failures sent shockwaves through the securities market as investors who had handed their assets over to broker-dealers suddenly lost access to their property. Existing bankruptcy safeguards did not adequately protect investors because investor assets were frequently commingled with the broker-dealer’s other assets, and thus would be tied up for years in extended bankruptcy proceedings. As more and more investors lost access to assets they had previously thought safe, the “situation... threatened a ‘domino effect’ involving otherwise solvent brokers that had substantial open transactions with firms that failed.

2015-06-29

United States Court of Appeals for the Second Circuit

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros.

CarVal UK Ltd. v. Giddens ex rel. SIPA Liquidation of Lehman Bros., 791 F.3d 277 (2015)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

SIPA was designed “

2013-07-11

United States Bankruptcy Court for the Southern District of New York

In re Lehman Bros.

In re Lehman Bros., 493 B.R. 437 (2013)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

upgrading] the financial responsibility requirements for registered brokers and dealers.

” 15 U.S.C. § 78fff. SIPA contains a plainly-worded and mandatory time limitation of six months for filing claims against the debtor while providing the limited right to extend this deadline for cause shown within the six-month time period. It provides that [n]o claim of a customer or other creditor of the debtor which is received by the trustee after the expiration of the six-month period beginning on the date of publication of notice... shall be allowed, except that the court may, upon application within such period and for cause shown, grant a reasonable, fixed extension of time for the filing of a claim by the United States, by a State or political subdivision thereof, or by an infant or incompetent person without a guardian. This rather rigid approach to time limitations differs from customary bankruptcy practice in setting bar dates and reflects Congress’s response to the policies underlying the SIPA statutory scheme — namely, ensuring the systematic integrity of the securities industry, restoring investor confidence, and “

2013-07-11

United States Bankruptcy Court for the Southern District of New York

In re Lehman Bros.

In re Lehman Bros., 493 B.R. 437 (2013)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_2

[A SIPA] trustee is empowered and directed by [SIPA] to return customer property, complete open transactions, enforce rights of subrogation, and liquidate the business of the member ... he is not empowered to reorganize or rehabilitate the business.

See SIPC v. Barbour, 421 U.S. 412, 415-16, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975) (citing S. Rep. No. 91-1218, pp. 2-4 (1970); H.R. Rep. No. 91-1613, pp. 2-4 (1970), and U.S. Code Cong. & Admin. News 1970, p. 5254.). See id. at 417, 95 S.Ct. 1733 (citing 15 U.S.C. § 78fff(a)) (“[A SIPA] trustee is empowered and directed by [SIPA] to return customer property, complete open transactions, enforce rights of subrogation, and liquidate the business of the member... he is not empowered to reorganize or rehabilitate the business.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_18

failure or instability of a significant number of brokerage firms.

In this case, the Securities and Exchange Commission seeks a court order compelling SIPC to liquidate a member broker-dealer, Stanford Group Company (SGC). SGC played an integral role in a multibillion-dollar financial fraud carried out through a web of companies. SGC’s financial advisors counseled investors to purchase certificates of deposit from an Antiguan bank that was part of the same corporate family. The Antiguan bank’s CDs eventually became worthless. The massive Stanford fraud spawned a variety of legal actions in a number of arenas, the bulk of which are not at issue here. This case involves the authority of a specific entity — SIPC—to take measures within its own statutorily bounded sphere. As to that issue, because the Antiguan bank, unlike SGC, was not a SIPC member, SIPC had no ability to initiate measures directly against the bank to protect the property of investors who purchased the bank’s CDs. The question in this case is whether SIPC can instead be ordered to proceed against SGC — rather than the Antiguan bank — to protect the CD investors’ property. It is common ground that SIPC can be compelled to do so only if those investors qualify as “customers” of SGC within the meaning of the governing statute. SIPC concluded that they do not, and the district court agreed. The court reasoned that the investors obtained the Antiguan bank’s CDs by depositing funds with the bank itself, not with SGC, and they thus cannot be considered customers of the lat ter. We therefore affirm the denial of the application to order SIPC to liquidate SGC. I. A. In 1970, Congress enacted the Securities Investor Protection Act (the Act or SIPA) in response to the “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_12

found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings.

” Before the Act, customers of a brokerage firm that fell into insolvency often “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

for the purpose, inter alia, of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit.

” The Act created SIPC, a nonprofit, private membership corporation established “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_31

is in or is approaching financial difficulty.

” Id. at 413, 95 S.Ct. 1733; see 15 U.S.C. § 78ccc(a)(l). Congress required most registered U.S. broker-dealers to become members of SIPC and to pay assessments used to fund SIPC’s investor protection measures. The Act requires the SEC and various industry self-regulatory organizations to notify SIPC upon learning that a SIPC-member firm “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to customers.

” SIPC may file an action for a protective decree in federal district court after determining, among other things, that the member firm “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

plenary authority to supervise ... SIPC

” 15 U.S.C. § 78eee(a)(3)(A). If the court grants SIPC’s application, the court must appoint a trustee and order the proceedings removed to bankruptcy court. 15 U.S.C. § 78eee(b)(3), (4). The trustee then oversees the liquidation of the member firm, returning any customer cash and securities on deposit with the broker. 15 U.S.C. § 78fff. If the insolvent broker’s funds prove inadequate to pay all customer claims, SIPC itself must cover any shortfalls up to statutory limits. • The Act gives the SEC “plenary authority to supervise... SIPC” in its implementation of the statute.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_8

may disapprove in whole or in part any bylaw or rule adopted by the Board of Directors of ... SIPC, or require the adoption of any rule it deems appropriate.

• The Act gives the SEC “plenary authority to supervise... SIPC” in its implementation of the statute. For instance, the SEC “may disapprove in whole or in part any bylaw or rule adopted by the Board of Directors of... SIPC, or require the adoption of any rule it deems appropriate.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_32

participate in any liquidation proceeding initiated by ... SIPC.

The SEC may also “participate in any liquidation proceeding initiated by... SIPC.

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_24

act for the protection of [SGC] customers.

The court also adopted SIPC’s view that a preponderance-of-the-evidence standard applies in § 78ggg(b) proceedings, id. at 5, but it concluded that the evidentiary standard ultimately did not matter because the case turned on “uncontested facts and an interpretation of law,” id. at 12. II. That provision comes into play only if SIPC has failed to “

2014-07-18

United States Court of Appeals for the District of Columbia Circuit

Securities & Exchange Commission v. Securities Investor Protection Corp.

Securities & Exchange Commission v. Securities Investor Protection Corp., 758 F.3d 357 (2014)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to customers

15 U.S.C. § 78ggg(b) (emphasis added); see also 15 U.S.C. § 78eee(a)(3)(A) (authorizing SIPC to file an application to liquidate only if it determines that the member broker “

1975-09-11

United States District Court for the Eastern District of Pennsylvania

Rauch v. United Instruments, Inc.

Rauch v. United Instruments, Inc., 405 F. Supp. 435 (1975)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_33

the district court of the United States in which the principal office of SIPC is located.

” While this legislative language is admittedly not a model of clarity, we interpret it as indicating that Congress did not intend the relief specifically provided for in the Aviation Act to close off the possibility of other remedies for a violation of the Act. In that case, the Securities and Exchange Commission was limited by statute to bringing an enforcement action in “

1975-09-11

United States District Court for the Eastern District of Pennsylvania

Rauch v. United Instruments, Inc.

Rauch v. United Instruments, Inc., 405 F. Supp. 435 (1975)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_22

It would be anomolous [sic] for Congress to have centralized SEC suits for the apparent convenience of SIPC while exposing the corporation to substantively identical suits by investors ‘in any court, State or Federal.’

” 15 U.S.C. § 78ggg(b). “It would be anomolous [sic] for Congress to have centralized SEC suits for the apparent convenience of SIPC while exposing the corporation to substantively identical suits by investors ‘in any court, State or Federal.

1982-06-24

United States District Court for the Western District of Michigan

Chairez v. County of Van Buren

Chairez v. County of Van Buren, 542 F. Supp. 706 (1982)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_1

where legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done.

As the Supreme Court stated in Bell v. Hood, 327 U.S. 678, 684, 66 S.Ct. 773, 776, 90 L.Ed. 939, 13 A.L.R.2d 383 (1946) “

2015-02-20

United States Court of Appeals for the Second Circuit

Securities Investor Protection Corp. v. 2427 Parent Corp.

Securities Investor Protection Corp. v. 2427 Parent Corp., 779 F.3d 74 (2015)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_27

plenary authority to supervise the SIPC,

Id. at 235. Instead, we upheld as a matter of law the Trustee’s determination that net equity should be calculated by the amount that a customer deposited into his or her BLMIS account, less any amount that he or she withdrew from the account. Id. at 233, 236-42 & 238 n. 7. We declined to address, however, whether the calculation of net equity should be adjusted to account for inflation or interest, because the Bankruptcy Court had not yet addressed the issue. Id. at 235 n. 6. Afterward, the Trustee and the SIPC argued to the Bankruptcy Court that SIPA does not permit adjustments for inflation or interest to customers’ net equity claims. The Securities and Exchange Commission (“SEC”), which has “

1976-11-29

United States District Court for the Southern District of New York

Securities Investor Protection Corp. v. Executive Securities Corp.

Securities Investor Protection Corp. v. Executive Securities Corp., 423 F. Supp. 94 (1976)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_12

Following a period of great expansion in the 1960’s, the securities industry experienced a business contraction that led to the failure or instability of a significant number of brokerage firms. Customers of failed firms found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings. In addition to its disastrous effects on customer assets and investor confidence, this situation also threatened a ‘domino effect’ involving otherwise solvent brokers that had substantial open transactions with firms that failed. Congress enacted the SIPA to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers. S.Rep.No.91-1218, pp. 2-4 (1970); H.R.Rep.No.91-1613, pp. 2-4 (1970).

Judge Galgay explained that “[h]ere the relationship between the named parties is even clearer” since, unlike the Baroff claimant, claimants did not invest or trade in securities through Executive and did not even have an account with Executive. (Opinion of Judge Galgay dated Feb. 23, 1976, at 6 — 7.) Accordingly, he affirmed the trustee’s determination that claimants were to be treated as general creditors of Executive and not as “customers” within the meaning of SIPA. Id. at 7-8. Examination of the cases interpreting SIPA and its legislative history, the text of SIPA and Section 60e of the Bankruptcy Act, 11 U.S.C. § 96(e), from which it was derived, each confirms the correctness of Judge Galgay’s conclusion that persons such as claimants are not “customers” of Executive within the meaning of SIPA. “Following a period of great expansion in the 1960’s, the securities industry experienced a business contraction that led to the failure or instability of a significant number of brokerage firms.

1976-11-05

United States District Court for the Southern District of New York

People’s Housing Development Corp. v. City of Poughkeepsie

People’s Housing Development Corp. v. City of Poughkeepsie, 425 F. Supp. 482 (1976)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_10

the overall structure and purpose of the SIPC scheme are incompatible

414 U.S. at 463, 94 S.Ct. at 696. Citing Amtrak, the Court held that “

1976-11-05

United States District Court for the Southern District of New York

People’s Housing Development Corp. v. City of Poughkeepsie

People’s Housing Development Corp. v. City of Poughkeepsie, 425 F. Supp. 482 (1976)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_20

. . . that motivated Congress to put the SIPC in the hands of a public board of directors, responsible to an agency experienced in regulation of the securities markets.

Citing Amtrak, the Court held that “the overall structure and purpose of the SIPC scheme are incompatible” with a private remedy, stressing the considerations: “... that motivated Congress to put the SIPC in the hands of a public board of directors, responsible to an agency experienced in regulation of the securities markets.

1981-03-26

United States District Court for the District of Utah

Walsh v. International Precious Metals Corp.

Walsh v. International Precious Metals Corp., 510 F. Supp. 867 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

clear contrary evidence of legislative intent

” 634 F.2d at 792. Accepting this analysis, the issue becomes who has the burden to show such an intent. This is one of the dividing points between the Second and the Fifth Circuit opinions. The Second Circuit stated: Whether rightly or wrongly in light of recent Supreme Court jurisprudence, the courts have [implied rights of action under] statutes of similar import in related fields, and Congress knew that they had done so. The burden lies on those who urge that the 1974 amendments demonstrate an intention to change prior law Leist v. Simplot, supra; see Curran v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 622 F.2d at 232-34. The Fifth Circuit states the opposite view: So significant a transfiguration of the extant statutory framework [as resulted from the 1974 amendments] is, itself, a wholesale obliteration of the prior status quo.... This “presumption” against finding an implied right of action may be overcome, but only upon “

1996-03-19

United States District Court for the Southern District of New York

In re Omni Mutual, Inc.

In re Omni Mutual, Inc., 193 B.R. 678 (1996)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit,

SIPA was passed by Congress in 1970 in order “to protect the public customers of securities dealers from suffering the consequences of financial instability in the brokerage industry,” Securities and Exch. Comm’n v. F.O. Baroff Co., Inc., 497 F.2d 280, 281 (2d Cir.1974) (citations omitted), by “

1981-06-09

United States District Court for the Northern District of Illinois

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance, 564 F. Supp. 862 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

for a decree adjudicating that customers of such member are in need of the protection provided by the Act.

Id. at 196, 67 S.Ct. at 1577. In the instant case, evaluation of the Board’s decision under the “insolvency” provision of § 1464(d)(6)(A) will not constitute an invasion of the FHLBB’s turf. In justifying the receivership, the agency expressly stated that insolvency was Telegraph’s central problem. That the wording of the Board’s statement did not systematically reflect the categories set forth in the statute does not obscure the substance of the Board’s findings. 14 . The Board also justifies the use of its own agent to satisfy the third requirement of the statute by the desire to prevent panic among the depositors. The Board points out that plaintiffs argument that an institution may be closed only when it genuinely does not have sufficient cash on hand to pay depositors suggests that conditions conducive to panic must exist before the Board is empowered to act. However, in view of the purpose of § 1464 and § 1729 to preserve public confidence, Sen. Report No. 1263, supra at 2536, it would be odd indeed if the Board were required to stay its hand until the crowds were at the association’s doors. 1 . Our reading of § 1464(d)(6)(A) is strongly supported by a decision of the Supreme Court involving a closely analogous statute. In reviewing the structure of the statute, the Court pointed out that if the SIPC determines that a member-investment house is failing, the SIPC may apply to a court “

1981-06-09

United States District Court for the Northern District of Illinois

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance, 564 F. Supp. 862 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_9

If the court finds any of the five conditions on which an SIPC application may be based, it must grant the application and issue the decree, and appoint as trustee for the liquidation of the business and as attorney for the trustee, ‘such persons as SIPC shall specify.’

The statute further provides that “[U]pon receipt of an application by SIPC... the court shall forthwith issue a protective decree if the debtor consents thereto, if the debtor fails to contest such application, or if the court finds that such debtor — ” meets any of four conditions, one of which is insolvency. As in § 1464(d)(6)(A), the conditions are listed in the disjunctive. “If the court finds any of the five conditions on which an SIPC application may be based, it must grant the application and issue the decree, and appoint as trustee for the liquidation of the business and as attorney for the trustee, ‘such persons as SIPC shall specify.

1981-06-09

United States District Court for the Northern District of Illinois

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance, 564 F. Supp. 862 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_9

must grant the application and issue the decree.

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412, at 416-417, 95 S.Ct. 1733 at 1736-37, 44 L.Ed.2d 263. The Court’s language fully supports our holding that we are not empowered to look beyond the existence of the statutory conditions to determine whether the receivership was “reasonable. As the Court stated in Barbour, if one of the conditions is met, the court “

1981-06-09

United States District Court for the Northern District of Illinois

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance, 564 F. Supp. 862 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_9

If the court finds any of the five conditions on which an SIPC application may be based, it must grant the application and issue the decree ....

We see no difference between the procedure prescribed by § 78eee and that prescribed by § 1464(d)(6)(A); nor do we see any reason to treat cases brought under § 1464(d)(6)(A) any differently from that brought under § 78eee. 2 . As the Court stated in Barbour, “If the court finds any of the five conditions on which an SIPC application may be based, it must grant the application and issue the decree.... ”

1981-06-09

United States District Court for the Northern District of Illinois

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance

Telegraph Savings & Loan Ass'n v. Federal Savings & Loan Insurance, 564 F. Supp. 862 (1981)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

any one of the ... conditions

421 U.S. at 416-417, 95 S.Ct. at 1736-1737. By analogy, we conclude that the FHLBB need only prove the existence of “any one of the... conditions” listed in § 1464(d)(6)(A) to withstand a challenge to its receivership.

1999-05-26

United States District Court for the Southern District of Texas

Trefny v. Bear Stearns Securities Corp.

Trefny v. Bear Stearns Securities Corp., 243 B.R. 300 (1999)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

Congress enacted the [Securities Investor Protection Act] to arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

B. The Securities Investor Protection Act The SIPA dates back to the 1960s, when the securities industry experienced a business contraction that led to the failure or instability of numerous brokerage firms. Customers of these failed broker-dealers found their cash or securities on deposit dissipated or tied up in lengthy bankruptcy proceedings. “

1995-06-20

United States District Court for the Eastern District of Pennsylvania

In re Lloyd Securities, Inc.

In re Lloyd Securities, Inc., 183 B.R. 386 (1995)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_23

a new form of liquidation proceeding, applicable only to member firms, designed to accomplish the completion of open transactions and the speedy return of most customer property.

The Bankruptcy Court held that the customers could recover only to the extent that they satisfy the strictures of either 11 U.S.C. § 503(b)(3)(D) or 11 U.S.C. § 506(e) of the Bankruptcy Code (the “Code”). In re Lloyd Sec., Inc., 163 B.R. 242, 245 (Bankr.E.D.Pa. 1994). Upon application of the standards borrowed from the Code to the facts presented, the Bankruptcy Court permitted near total recovery for only one of the two applications for compensation at issue here. Further, the Bankruptcy Court concluded that the customers were not entitled to recover compensation under the common fund doctrine. The Trustee and the Securities Investor Protection Corporation (“SIPC”) filed an appeal, docketed at 94-CV-1391, of the order granting compensation for the majority of the services set forth in the first application. Action No. 94-CV-1416 is the customers’ appeal of the order denying them compensation for the services delineated in the other application. This Memorandum addresses both appeals. We apply a clearly erroneous standard to the Bankruptcy Court’s factual findings and a plenary standard to its conclusions of law. In re Siciliano, 13 F.3d 748, 750 (3d Cir.1994). I. BACKGROUND A. SIPA At the outset, we offer this brief, tailored overview of the purpose and operation of SIPA to place the issues presented in the proper context. In 1970, Congress enacted SIPA in order to address the calamitous impact that the failure of brokerage firms had on both customer assets and investor confidence. Securities Investor Protection Corp. v. Barbour, 421 U.S. 412, 415, 95 S.Ct. 1733, 1736, 44 L.Ed.2d 263 (1975) (citations omitted). Accordingly, Congress established SIPC, a non-profit, private corporation to which most registered broker-dealers must belong. 15 U.S.C. § 78ece. In this way, SIPA creates “

1980-12-16

United States Court of Appeals for the Fifth Circuit

Rivers v. Rosenthal & Co.

Rivers v. Rosenthal & Co., 634 F.2d 774 (1980)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

clear contrary evidence of legislative intent

TAMA, 444 U.S. at 19,100 S.Ct. at 247. This “presumption” against finding an implied right of action may be overcome, but only upon “

1980-12-16

United States Court of Appeals for the Fifth Circuit

Rivers v. Rosenthal & Co.

Rivers v. Rosenthal & Co., 634 F.2d 774 (1980)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

clear ... evidence of legislative intent

Leist, 638 F.2d at 340 (Mansfield, J., dissenting). Accord, Stone v. Saxon & Windsor Group Ltd., 485 F.Supp. at 1218, 1220. The history of judicial recognition of a private cause of action under the CEA prior to 1974 justifies some adjustment to and tailoring of the traditional formulation of the precise nature of congressional intent that must be shown. Rather than requiring establishment of a legislative intent to create a cause of action, we will require proponents of the implied right here to show, first, simply that Congress was actually aware in 1974 of this prior judicial recognition of an implied right of action, and second, that it approved these holdings and affirmatively intended to adopt or incorporate this extant, judicially articulated, right of action into the comprehensive express legislative enforcement scheme erected by the 1974 Act. ■ It is to this precise inquiry, in addition to the arguments and evidence put forth by plaintiffs, along with our sister courts’ attempt to satisfy this inquiry, that we now turn our attention. III. CONGRESSIONAL INTENT A. Our study of these sources, however, guided by the plaintiffs’ arguments, fails to yield any such “clear... evidence of legislative intent” to adopt such a private right.

2002-11-22

United States Bankruptcy Court for the District of Minnesota

Ferris, Baker Watts, Inc. v. Stephenson (In re MJK Clearing, Inc.)

Ferris, Baker Watts, Inc. v. Stephenson (In re MJK Clearing, Inc.), 286 B.R. 109 (2002)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

The term “customer property” includes— (A) securities held as property of the debtor to the extent that the inability of the debtor to meet its obligations to customers for their net equity claims based on securities of the same class and series of an issuer is attributable to the debtor’s noncompliance with the requirements of section 78o(c)(3) of this title and the rules prescribed under such section; (B) resources provided through the use or realization of customers’ debit cash balances and other customer-related debit items as defined by the Commission by rule; (C) any cash or securities apportioned to customer property pursuant to section 78fff(d) of this title; and (D) any other property of the debtor which, upon compliance with applicable laws, rules, and regulations, would have been set aside or held for the benefit of customers, unless the trustee determines that including such property within the meaning of such term would not significantly increase customer property. 15 U.S.C. § 78lll(4) (2002) (emphasis added). FBW argues that since the Securities and Exchange Commission suspended the requirement to make special reserve deposits, pursuant to SEC Rule 15c3-3, due to the 9/11 terrorist attacks, MJK had no requirement to segregate cash for the week ending September 14, 2001, for the benefit of customers under applicable SEC Rules. Therefore, FBW argues, as of September 21, 2001, the date of the GENI stock loan transaction, MJK had no requirement to segregate cash for the benefit of customers under applicable SEC rules and there is no basis to find that FBW’s cash was customer property within the meaning of SIPA. FBW further argues that ordinary principles of bankruptcy law apply to FBW’s collateral, and that under such law the cash is not property of the debtor’s estate. This misstates actions taken by the SEC after September 11. On the filing date of the debtor’s liquidation proceeding, the debtor, pursuant to SEC Rule 15c3-3, 17 C.F.R. § 240.15c3-3, should have segregated all cash in its possession for the benefit of customers, to the exclusion of other creditors. The applicable laws, rules, and regulations referred to in subsection (D) of the “Customer Property” definition in SIPA are found, essentially in 17 C.F.R. § 240.15c3-3, and is known as the “Customer Protection Rule. This rule was adopted by the SEC following Congress’ enactment of SIPA, which was designed to, among other things, “

2005-04-08

United States Bankruptcy Court for the Southern District of New York

Picard v. Taylor (In re Park South Securities, LLC)

Picard v. Taylor (In re Park South Securities, LLC), 326 B.R. 505 (2005)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_2

The trustee is empowered and directed by [SIPA] to ... enforce rights of subrogation ...

744 F.Supp. 531, 557 (“SIPC (not a SIPC trastee) becomes subrogated to such claims [that it has paid] of customers”). See also In re A.R. Baron & Co., 280 B.R. 794, 804-805 (because SIPA does not specifically confer any subrogation claims on a SIPC trustee, and the trustee is not secondarily liable on the debt (as is SIPC), a SIPC trustee has neither statutory nor common law subrogation rights). See, e.g., SIPC v. Barbour, 421 U.S. 412, 417, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975) (“The trustee is empowered and directed by [SIPA] to... enforce rights of subrogation...”); Appleton v. First Nat’l Bank, 62 F.3d at 800-801; SIPC v. Vigman, 803 F.2d 1513, 1516 (9th Cir.1986) (“Under SIPA, a trustee may be appointed to... enforce rights of subrogration... ”); Handelman v. Weiss, 368 F.Supp. 258, 261 (S.D.N.Y.1973).

2009-02-24

United States Bankruptcy Court for the Southern District of New York

Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC

Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 401 B.R. 629 (2009)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_5

SIPC is a 'nonprofit, private membership corporation, to which most registered brokers and dealers are required to belong.’

In re Manhattan Inv. Fund Ltd., 310 B.R. 500, 509 (Bankr. S.D.N.Y.2002). "SIPC is a 'nonprofit, private membership corporation, to which most registered brokers and dealers are required to belong.

2007-05-29

United States Court of Appeals for the Third Circuit

Peloro v. United States

Peloro v. United States, 488 F.3d 163 (2007)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_15

The Securities Investor Protection Corp. (SIPC) was established by Congress as a nonprofit membership corporation for the purpose, inter alia, of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit.

Because there was no dispute as to the fact that the certificated securities had been transferred by the federal defendants to R.H. and/or the Trustee more than six years before Ms. Peloro filed suit under Rule 41(g), the District Court was within its discretion to determine these facts without a hearing, and the determination of these facts satisfied its responsibility under Chambers. Further, having made this determination, the District Court correctly concluded that — because the federal defendants could neither return the securities nor be sued for money damages under Rule 41(g) — no set of provable facts existed under which Ms. Peloro would be entitled to a remedy. The District Court therefore properly dismissed Ms. Peloro’s Rule 41(g) claim against the federal defendants. V. For the reasons stated, we will affirm the District Court’s October 14, 2004 order granting the Trustee’s and R.H.’s motions for summary judgment, granting the federal defendants’ motion to dismiss, and dismissing all claims with prejudice. 1 . Ms. Peloro is also referred to in the record as Filomena Peloro del Olmo or Filomena P. del Olmo. For consistency, we refer to her throughout as "Peloro” or "Ms. Peloro.” 2 . Since the Ashland GA URFA 8% “customer name security” was ultimately returned to Ms. Peloro, see text infra, the disposition of that security was not at issue in her claims before the District Court, nor is it in issue on this appeal. “

1975-12-17

United States District Court for the Eastern District of Pennsylvania

Kroungold v. Triester

Kroungold v. Triester, 407 F. Supp. 414 (1975)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_13

clear contrary evidence of legislative intent,

Plaintiffs concede in their memorandum contra defendants’ motion that it is the Act of 1939, 70 P.S. § 31 et seq., and not the Pennsylvania Securities Act of 1972, 70 Pa.C.S.A. § 1-101 et seq. (Supp.1975), which is applica ble in this case. See 70 Pa.C.S.A. § 1— 704(a) (Supp.1975). Without citing any particular section of the statute, plaintiffs ask us to imply a private right of action for damages from the 1939 Act. We do not believe that the existence of a private right of action may be properly inferred from the Pennsylvania Securities Act of 1939 and we will, therefore, refuse to exercise pendent jurisdiction over this claim. See Kobil v. Forsberg, 389 F.Supp. 715, 717, 720 (W.D.Pa. 1975). Unlike the 1972 Act, which clearly provides in Part V for private actions to recover damages from violators of that Act, the Pennsylvania Securities Act of 1939 makes no mention of enforcement by private individuals or civil liability for violations of its provisions. We think the specific inclusion of such provisions in the new statute indicates a recognition on the part of the Pennsylvania legislature that a private remedy was not available under the 1939 Act. While the Court recognizes that the Pennsylvania Securities Act is remedial legislation primarily intended to protect the investing public, Commonwealth v. Yaste, 166 Pa.Super. 275, 70 A.2d 685 (1950), this fact alone does not necessitate the inference of a right of action in favor of investors who deem themselves to be in need of the Act’s protection. Cf. Securities Investor Protection Corp. v. Barbour, 421 U.S. 412, 95 S.Ct. 1733, 1739, 44 L.Ed.2d 263 (1975). The Superior Court of Pennsylvania has referred to criminal prosecution as “the penalty of the act.” In the absence of any “

1977-08-11

United States District Court for the Northern District of Illinois

Bratton v. Shiffrin

Bratton v. Shiffrin, 440 F. Supp. 1257 (1977)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_7

£T]he inference of such a private cause of action not otherwise authorized by the statute must be consistent with the evident legislative intent and, of course, with the effectuation of the purposes intended to be served by the Act.

Notice of Proposed Rule Making, 30 Fed.Reg. 281, 282 (1965) (explanatory statement issued by the C.A. B.). However, it is equally clear that the plaintiff travel agencies are not within the class for whose “especial” benefit the statute and regulations were enacted. Travel agencies are not members of the traveling public. Thus, the plaintiff agencies fail to meet the threshold requirement for implying a private right of action. “

2011-11-01

United States District Court for the Southern District of New York

Picard v. JPmorgan Chase & Co.

Picard v. JPmorgan Chase & Co., 460 B.R. 84 (2011)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_12

customers of failed firms found their cash and securities on deposit either dissipated or tied up in lengthy bankruptcy proceedings.

KBL Corp. v. Amouts, 646 F.Supp.2d 335, 341 (S.D.N.Y.2009). Thus, the Trustee identifies no legal basis for contribution, and therefore lacks standing on that ground as well. C. Standing as common law bailee or equitable subrogee Having failed to ground standing in either the Bankruptcy Code or New York’s law of contribution, the Trustee’s final argument is that SIPA empowers him to do more than a typical Chapter 11 trustee can; or, more precisely, that he is so empowered, SIPA notwithstanding. He argues first that SIPA impliedly creates a common law bailment, which permits him to bring causes of action arising out of damage to the customer fund. In addition, he argues that he can pursue customer causes of action that SIPC could pursue as an equitable subrogee of customer net equity claims. Judge Rakoff rejected these contentions, HSBC, 454 B.R. at 30-36; I do as well. 1. After that contraction, “

2011-11-01

United States District Court for the Southern District of New York

Picard v. JPmorgan Chase & Co.

Picard v. JPmorgan Chase & Co., 460 B.R. 84 (2011)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_26

arrest this process, restore investor confidence in the capital markets, and upgrade the financial responsibility requirements for registered brokers and dealers.

SIPA was intended to “

2011-11-01

United States District Court for the Southern District of New York

Picard v. JPmorgan Chase & Co.

Picard v. JPmorgan Chase & Co., 460 B.R. 84 (2011)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_23

applicable only to member firms, designed to accomplish the completion of open transactions and the speedy return of most customer property.

SIPA created a new form of liquidation proceeding that was “

1992-04-13

United States Court of Appeals for the Tenth Circuit

Securities Investor Protection Corp. v. Blinder, Robinson & Co.

Securities Investor Protection Corp. v. Blinder, Robinson & Co., 140 F.2d 960 (1992)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_6

has failed or is in danger of failing to meet its obligations to its customers,

In her written order, the district judge stated, inter alia: that the customers of Blinder, Robinson are in need of the protection afforded by SIPA; that Mr. Keller was appointed trustee with the duties and powers prescribed by the act, and a $100,000 fidelity bond was required; that the creditors and other persons were notified that the automatic stay provisions of 11 U.S.C. § 362(a) operated as a stay of the commencement of judicial proceedings, the enforcement of judgments, and “any act to obtain possession of property of the estate or of property from the estate,” inter alia; and that any pending bankruptcy was stayed. Other provisions required by the statute were also included. The district judge was requested to stay her order pending appeal, but denied that relief, and the trustee began liquidating Blinder, Robinson upon appointment. In this appeal, Blinder, Robinson challenges the district court’s finding of the existence of two of the statutory grounds necessary for the appointment of a trustee. It also claims a deprivation of due process by the rapid manner in which the district court acted on the SIPC application without an evidentiary hearing. II The SIPC may initiate a liquidation proceeding by applying to a court for a protective decree if it determines that a member “

1992-04-13

United States Court of Appeals for the Tenth Circuit

Securities Investor Protection Corp. v. Blinder, Robinson & Co.

Securities Investor Protection Corp. v. Blinder, Robinson & Co., 140 F.2d 960 (1992)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_23

designed to accomplish the completion of open transactions and the speedy return of most customer property.

Brief of Appellee SIPC at 7 (emphasis in original). We are convinced that the district court’s ruling was proper under the correct construction of the statutory phrase concerning a member’s ability to meet “its obligations as they mature.” We read the term “obligations” in § 78eee(b)(l)(A) to include a broker-dealer’s general as well as financial obligations to both its customers and to others. The phrase “as they mature” should be read to mean that the condition would be satisfied if the stockbroker was unable to meet its obligations on demand. As the Supreme Court has recognized, the SIPA liquidation proceeding for stockbrokers was “

1989-08-10

United States Bankruptcy Court for the Northern District of Ohio

McKenny v. McGraw (In re Bell & Beckwith)

McKenny v. McGraw (In re Bell & Beckwith), 104 B.R. 842 (1989)

1975-05-19

Supreme Court of the United States

Securities Investor Protection Corp. v. Barbour

Securities Investor Protection Corp. v. Barbour, 421 U.S. 412 (1975)

541714_0

Congress’ primary purpose in enacting the SIPA and creating the SIPC was, of course, the protection of investors.

59 B.R. at 371. The opinion discusses various specific recommendations which were rejected. Id. at 371-372. Thus, the weight which should be accorded to the Task Force Report, on questions concerning SIPA’s method of allocation, would appear to be slight. After reviewing the legislative history related to the allocation issue, the Court finds it to be sparse and unpersuasive. It will not play a significant role in the determination of the allocation issue. F. The Policy Behind SIPA The next arena in which the parties present their respective arguments is public policy. The McKennys argue that the policy behind SIPA is to provide protection to investors, not to SIPC. As the Supreme Court stated in Securities Investor Protection Corp. “