§ 78eee. Protection of customers

Footnotes

1. 1 So in original. Probably should be “(i)”.
2. 2 So in original. Probably should be “(ii)”.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1970

   Securities In rest or Protection Act of 1970

   Pub. L. 91–598 § 5 · 84 Stat. 1620

   Enacted · 15 U.S.C. § 78eee

   Pub. L. 91–598, § 5, Dec. 30, 1970, 84 Stat. 1644

   Source evidence

   Code source credit
   Pub. L. 91–598, § 5, Dec. 30, 1970, 84 Stat. 1644

   Enacted provision · exact public law section
   SEC. 5. PROTECTION OF CUSTOMERS. (a) Determination of Need of Protection.— (1) Notice to SIPC.— If the Commission or any self-regulatory organization is aware of facts which lead it to believe that any broker or dealer subject to its regulation is in hr is approaching financial difficulty, it shall immediately notify SIPC, and, if such notification is by a self-regulatory organization, the Commission. (2) Action by SIPC.— If SIPC determines that any member has failed or is in danger of failing to meet its obligations to customers and that there exists one or more of the conditions specified in subsection (b)(1)(A), SIPC, upon notice to such member, may apply to any court of competent jurisdiction specified in section 27 or 21(e) of the 1934 Act for a decree adjudicating 48 Stat. 902, 900. 15 USC 78aa, 78u. that customers of such member are in need of the protection provided by this Act. (3) Effect of other pending actions,— An application under paragraph (2)— (A) with the consent of the Commission, may be combined with any action brought by the Commission including an action by it for a temporary receiver pending an appointment of a trustee under subsection (b) (3), and (B) may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding or any proceeding to reorganize., conserve, or liquidate such member or its property, of any proceeding to enforce a Hen against property of such member. (b) Court Action.— (1) Issuance of decree.— (A) Findings by court.— A court to which application is made pursuant to subsection (a) (2) shall grant the application and issue a decree adjudicating that customers of the member named in the application are in need of protection under this Act if it finds that such member— (i) is insolvent within the meaning of section 1(19) of the Bankruptcy Act, or is unable to meet its obligations 52 Stat. 841. 11 USC 1. as they mature, or (ii) has committed an act of bankruptcy within the meaning of section 3 of the Bankruptcy Act, or 52 Stat. 844; 66 Stat. 421. 11 USC 21. (iii) is the subject of a proceeding pending in any court or before any agency of the United States or any State in which a receiver, trustee, or liquidator for such member has been appointed, or (iv) is not in compliance with applicable requirements under the 1934 Act or rules or regulations of the Commission 48 Stat. 881. 15 USC 78a. or any self-regulatory organization with respect to financial responsibility or hypothecation of customers’ securities, or (v) is unable to make such computations as may be necessary to establish compliance with such financial responsibility or hypothecation rules or regulations. (B) Uncontented, etc., applications.— If within three business days after the filing of an application pursuant to subsection (a)(2), or such other period as the court may order, the debtor shall consent to or fail to contest such application or shall fail to show facts sufficient to contorvert any material allegation of such application, the court shall forthwith grant the application and issue a decree adjudicating that customers of the member named in the application are in need of protection under this Act. (2) Exclusive jurisdiction over debtor.— Upon the filing of an application pursuant to subsection (a) (2), the court to which application is made shall have exclusive jurisdiction of the debtor involved and its property wherever located with the powers, to the extent consistent with the purposes of this Act, of a court, of bankruptcy and of a court in a proceeding under chapter X of the Bankruptcy Act, Pending an adjudication under para- 52 Stat. 883; 80 Stat. 1278. 11 USC 501. graph (1) such court shall stay, and upon appointment by it of a trustee as provided in paragraph (3) such court shall continue the stay of, any pending bankruptcy, mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the debtor or its property and any other suit against any receiver, conservator, or trustee of the debtor or its property. Pending such adjudication and upon the appointment by it of such trustee, the court may stay any proceeding to enforce a lien against property of the debtor or any other suit against the debtor. Pending such adjudication, such court may appoint a temporary receiver. (3) Appointment of trustee,—If the court grants an application and makes an adjudication under paragraph (1), the court shall forthwith appoint as trustee for the liquidation of the business of the debtor in accordance with section 6, and as attorney for such trustee, such persons as SIPC shall specify. No person shall be appointed as such trustee or attorney if such person is not “disinterested” within the meaning of section 158 of the Bankruptcy Act. (4) Debtor and filing date defined.— For purposes of this Act— (A) Debtor.— The term “debtor” means a member of SIPC in respect of whom an application has been filed pursuant to subsection (a)(2). (B) Filing date.— The term “filing date” means the date on which an application with respect to any debtor is filed under subsection (a) (2); except that if— (i) a petition was filed before such date by or against the debtor under the Bankruptcy Act, or (ii) the debtor is the subject of a proceeding pending in any court or before any agency of the United States or any State in which a receiver, trustee, or liquidator for such debtor was appointed which proceeding was commenced before the date on which such application was filed, then the term “filing date” means the date on which such petition was filed or such proceeding commenced. (c) SEC Participation in Proceedings.— The Commission may, on its own motion, file notice of its appearance in any proceeding under this Act and may thereafter participate as a party.

2. 1978

   Securities Investor Protection Act Amendments of 1978

   Pub. L. 95–283 § 7(a) · 92 Stat. 249

   1. Added · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), added par. (2)

   2. Redesignated · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), redesignated former par. (2) as (3) and, as so redesignated, revised format of provisions by setting out cls. (A) and (B)

   3. Inserted · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), inserted provisions relating to any person who was a member within 180 days prior to such determination and provisions relating to claims filed under section 78fff–3 of this title

   4. Redesignated · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), redesignated former par. (3) as (4) and, as so redesignated

   5. Substituted · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), substituted “with respect to a member of SIPC filed with a court under paragraph (3)” for “under paragraph (2)” in introductory text

   6. Inserted · 15 U.S.C. § 78eee(a)

      Pub. L. 95–283, § 7(a), inserted “may,” before “with the” in cl. (A)

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 95–283, § 7(a), added par. (2), redesignated former par. (2) as (3) and, as so redesignated, revised format of provisions by setting out cls. (A) and (B) and inserted provisions relating to any person who was a member within 180 days prior to such determination and provisions relating to claims filed under section 78fff–3 of this title, and redesignated former par. (3) as (4) and, as so redesignated, substituted “with respect to a member of SIPC filed with a court under paragraph (3)” for “under paragraph (2)” in introductory text and inserted “may,” before “with the” in cl. (A).

   Enacted provision · exact public law section
   (a) Section 5(a) of such Act (15 U.S.C. 78eee(a)) is amended by striking out paragraphs (2) and (3) and inserting in lieu thereof the following new paragraphs: “(2) Action by self-regulatory organization.— If a self-regulatory organization has given notice to SIPC pursuant to subsection (a)(1) with respect to a broker or dealer, and such broker or dealer undertakes to liquidate or reduce its business either pursuant to the direction of a self-regulatory organization or voluntarily, such self-regulatory organization may render such assistance or oversight to such broker or dealer as it considers appropriate to protect the interests of customers of such broker or dealer. The assistance or oversight by a self-regulatory organization shall not be deemed the assumption or adoption by such self-regulatory organization of any obligation or liability to customers, other creditors, shareholders, or partners of the broker or dealer, and shall not prevent or act as a bar to any action by SIPC. “(3) Action by sipc.— If SIPC determines that— “(A) any member of SIPC (including any person who was a member within one hundred eighty days prior to such determination) has failed or is in danger of failing to meet its obligations to customers; and “(B) one or more of the conditions specified in subsection (b)(1) exist with respect to such member, SIPC may, upon notice to such member, file an application for a protective decree with any court of competent jurisdiction specified in section 21(e) or 27 of the 1934 Act, except that no such 15 USC 78u, 78aa. application shall be filed with respect to a member the only customer’s of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 9. 15 USC 78iii. “(4) Effect of other pending actions.— An application with respect to a member of SIPC filed with a court under paragraph (3)— “(A) may, with the consent of the Commission, be combined with any action brought by the Commission, including an action by the Commission for a temporary receiver pending an appointment of a trustee under subsection (b)(3); and “(B) may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding or any proceeding to reorganize, conserve, or liquidate such member or its property, or any proceeding to enforce a lien against property of such member.”.

3. 1978

   Securities Investor Protection Act Amendments of 1978

   Pub. L. 95–283 § 7(b) · 92 Stat. 249

   1. Inserted · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) inserted “protective” after “of” in heading

   2. Substituted · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) substituted provisions relating to issuance of protective decrees, for provisions relating to specific findings necessary for issuance of a decree and uncontested, etc., applications, in par. (2) substituted “Jurisdiction and powers of court” for “Exclusive jurisdiction over debtor” in heading

   3. Substituted · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) substituted provisions setting forth jurisdiction and powers of court with respect to exclusivity of such jurisdiction, for provisions relating to exclusive jurisdiction over the debtor, in par. (3) inserted “and attorney” after “trustee” in heading

   4. Substituted · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) substituted provisions relating to appointment of trustee and attorney, for provisions relating to appointment of trustee, in par. (4) substituted “Reference to referee in bankruptcy” for “Debtor and filing date defined” in heading

   5. Substituted · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) substituted provisions relating to reference to referee in bankruptcy, for provisions defining terms “debtor” and “filing date”

   6. Added · 15 U.S.C. § 78eee(b)

      Pub. L. 95–283, § 7(b), in par. (1) added pars. (5) and (6)

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 95–283, § 7(b), in par. (1) inserted “protective” after “of” in heading and substituted provisions relating to issuance of protective decrees, for provisions relating to specific findings necessary for issuance of a decree and uncontested, etc., applications, in par. (2) substituted “Jurisdiction and powers of court” for “Exclusive jurisdiction over debtor” in heading and substituted provisions setting forth jurisdiction and powers of court with respect to exclusivity of such jurisdiction, for provisions relating to exclusive jurisdiction over the debtor, in par. (3) inserted “and attorney” after “trustee” in heading and substituted provisions relating to appointment of trustee and attorney, for provisions relating to appointment of trustee, in par. (4) substituted “Reference to referee in bankruptcy” for “Debtor and filing date defined” in heading and substituted provisions relating to reference to referee in bankruptcy, for provisions defining terms “debtor” and “filing date”, and added pars. (5) and (6).

   Enacted provision · exact public law section
   (b) Section 5(b) of such Act (15 U.S.C. 78eee(b)) is amended to read as follows: “(b) Court Action.— “(1) Issuance of protective decree.— Upon receipt of an application by SIPC under subsection (a)(3), 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— “(A) is insolvent within the meaning of the Bankruptcy Act, or is unable to meet its obligations as they mature; Post, p. 2549. “(B) has committed an act of bankruptcy within the meaning of the Bankruptcy Act; “(C) is the subject of a proceeding pending in any court or before any agency of the United States or any State in which a receiver, trustee, or liquidator for such debtor has been appointed; “(D) is not in compliance with applicable requirements under the 1934 Act or rules of the Commission or any self-regulatory 15 USC 78a. organization with respect to financial responsibility or hypothecation of customers’ securities; or “(E) is unable to make such computations as may be necessary to establish compliance with such financial responsibility or hypothecation rules. Unless the debtor consents to the issuance of a protective decree, the application shall be heard three business days after the date on which it is filed, or at such other time as the court shall determine, taking into consideration the urgency which the circumstances require. “(2) Jurisdiction and powers of court.— “(A) Exclusive jurisdiction.— Upon the filing of an application with a court for a protective decree with respect to a debtor, such court— “(i) shall have exclusive jurisdiction of such debtor and its property wherever located (including property located outside the territorial limits of such court and property held by any other person as security for a debt or subject to a lien); “(ii) shall have exclusive jurisdiction of any suit against the trustee with respect to a liquidation proceeding; and “(iii) except as inconsistent with the provisions of this Act, shall have the jurisdiction, powers, and duties conferred upon a court of bankruptcy by the Bankruptcy Act, together with such other jurisdiction, powers, and duties as are prescribed by this Act. “(B) Stay of pending actions.— Pending the issuance of a protective decree under paragraph (1), the court with which an application has been filed— “(i) shall stay any pending bankruptcy, mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the debtor or its property and any other suit against any receiver, conservator, or trustee of the debtor or its property, and shall continue such stay upon appointment of a trustee pursuant to paragraph (3); “(ii) may stay any proceeding to enforce a lien against property of the debtor or any other suit against the debtor, including a suit by stockholders of the debtor which interferes with prosecution by the trustee of claims against former directors, officers, or employees of the debtor, and may continue such stay upon appointment of a trustee pursuant to paragraph (3); “(iii) may stay enforcement of, and upon appointment of a trustee pursuant to paragraph (3), may continue the stay for such period of time as may be appropriate, but shall not abrogate, the right of setoff Post, p. 2549. provided in section 68 of the Bankruptcy Act, and the right to enforce a valid, non preferential lien or pledge against the property of the debtor: and “(iv) may appoint a temporary receiver. “(3) Appointment of trustee and attorney.— If the court issues a protective decree, under paragraph (1), such court shall forthwith appoint, as trustee for the liquidation of the business of the debtor and as attorney for the trustee, such persons as SIPC, in its sole discretion, specifies. The persons appointed as trustee and as attorney for the trustee may be associated with the same firm. SIPC may, in its sole discretion, specify itself or one of its employees as trustee in any case in which SIPC has determined that the liabilities of the debtor to unsecured general creditors and to subordinated lenders appear to aggregate less than $750,000 and that there appear to be fewer than five hundred customers of such debtor. No [arson may be appointed to serve as trustee or attorney for the trustee if such person is not disinterested within the meaning of paragraph (6), except that for any specified purpose other than to represent a trustee in conducting a liquidation proceeding, the trustee may, with the approval of SIPC and the court, employ an attorney who is not disinterested. A trustee appointed under this paragraph shall qualify by filing a bond in the manner prescribed by the applicable provisions of the Bankruptcy Act, except that neither SIPC Post, p. 2549. nor any employee of SIPC shall be required to file a bond when appointed as trustee. “(4) Reference to referee in bankruptcy.— If the court issues a protective decree and appoints a trustee under this section, such court may, at any stage of the proceeding, refer the proceeding to a referee in bankruptcy to hear and determine any or all matters, or to a referee in bankruptcy as special master to hear and report generally or upon specified matters. Only under special circumstances shall a reference be made to a special master who is not a referee in bankruptcy. “(5) Compensation for services and reimbursement of expenses.— “(A) Allowances in general.— The court shall grant reasonable compensation for services rendered and reimbursement for proper costs and expenses incurred (hereinafter in this paragraph referred to as ‘allowances’) by a trustee, and by the attorney for such a trustee, in connection with a liquidation proceeding. No allowances (other than reimbursement for proper costs and expenses incurred) shall be granted to SIPC or any employee of SIPC for serving as trustee. Allowances may be granted on an interim basis during the course of the liquidation proceeding at such times and in such amounts as the court consider appropriate. “(B) Allowances to referee in bankruptcy or special master.— In the event a proceeding has been referred to a referee in bankruptcy or special master, the district judge may grant reasonable allowances to such referee in bankruptcy or a special master, in the manner provided for in a case hied under chapter X of the Bankruptcy Act, as now in effect or as amended from time to time. “(C) Application for allowances.— Any person seeking allowances shall file with the court an application which complies in form and content with the provisions of the Bankruptcy Act governing applications for allowances under such Act. A copy of such application shall be served upon SIPC when filed. The court shall fix a time for a hearing Hearing. Notice. on such application, and notice of such hearing shall be given to the applicant, the trustee, the debtor, the creditors, SIPC, and such other persons as the court may designate, except that notice need not be given to customers whose claims have been or will be satisfied in full or to creditors who cannot reasonably be expected to receive any distribution during the course of the liquidation proceeding. “(D) Recommendations of sipc and awarding of allowances.— Whenever an application for allowances is filed pursuant to subparagraph (C), SIPC shall file its recommendation with respect to such allowances with the court prior to the hearing on such application and shall, if it so requests, be allowed a reasonable time after such hearing within which to file a further recommendation. In any case in which such allowances are to be paid by SIPC without reasonable expectation of recoupment thereof as provided in this Act and there is no difference between the amounts requested and the amounts recommended by SIPC, the court shall award the amounts recommended by SIPC. In determining the amount of allowances in all other cases, the court shall give due consideration to the nature, extent, and value of the services rendered, and shall place considerable reliance on the recommendation of SI PC. “(E) Applicable restrictions.— The restrictions on sharing Post, p. 2549. of compensation set forth in the Bankruptcy Act shall apply to allowances. “(F) Charge against estate.— Allowances granted by the court, including interim allowances, shall be charged against the general estate of the debtor as a cost and expense of administration. If the general estate is insufficient to pay allowances in whole or in part, SIPC shall advance such funds as are necessary for such payment. “(6) Disinterestedness.— “(A) Standards.— For purposes of paragraph (3), a person shall not be deemed disinterested if— “(i) such person is a creditor (including a customer), stockholder, or partner of the debtor; “(ii) such person is or was an underwriter of any of the outstanding securities of the debtor or within five years prior to the filing date was the underwriter of any securities of the debtor: “(iii) such person is, or was within two years prior to the filing date, a director, partner, officer, or employee of the debtor or such an underwriter, or an attorney for the debtor or such an underwriter; or “(iv) it appeal’s that such person has, by reason of any other direct or indirect relationship to, connection with, or interest in the debtor or such an underwriter, or for any other reason, an interest materially adverse to the interests of any class of creditors (including customers) or stockholders. except that SIPC shall in all cases be deemed disinterested, and an employee of SIPC shall be deemed disinterested if such employee would, except for his association with SIPC, meet the standards set forth in this subparagraph. “(B) Hearing.— The court shall fix a time for a hearing on disinterestedness, to be held promptly after the appointment of a trustee. Notice of such hearing shall be mailed at least ten days prior thereto to each person who, from the books and records of the debtor, appears to have been a customer of the debtor with an open account within the past twelve months, to the address of such person as it appears from the books and records of the debtor, and to the creditors and stockholders of the debtor, to SIPC, and to such other Notice, publication. persons as the court may designate. The court may, in its discretion, also require that notice be given by publication in such newspaper or newspapers of general circulation as it may designate. At such hearing, at any adjournment thereof, or upon application, the court shall hear objections to the retention in office of a trustee or attorney for a trustee on the grounds that such person is not disinterested.”.

4. 1978

   Securities Investor Protection Act Amendments of 1978

   Pub. L. 95–283 § 7(c) · 92 Stat. 249

   Added · 15 U.S.C. § 78eee(d)

   Pub. L. 95–283, § 7(c), added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 95–283, § 7(c), added subsec. (d).

   Enacted provision · exact public law section
   (c) Section 5 of such Act (15 U.S.C. 78eee) is amended by adding at the end thereof the following new subsection: “(d) SIPC Participation.— SIPC shall be deemed to be a party in interest as to all matters arising in a liquidation proceeding, with the right to be heard on all such matters, and shall be deemed to have intervened with respect to all such matters with the same force and effect as if a petition for such purpose had been allowed by the court.”.

5. 1978

   Pub. L. 95–598 § 308(a)(1) · 92 Stat. 2549

   Substituted · 15 U.S.C. § 78eee(b)(1)(A)

   Pub. L. 95–598, § 308(a)(1), substituted “section 101 of title 11” for “the Bankruptcy Act”

   Source evidence

   Code amendment note
   Subsec. (b)(1)(A). Pub. L. 95–598, § 308(a)(1), substituted “section 101 of title 11” for “the Bankruptcy Act”.

   Enacted provision · exact public law section
   (1) by striking out “the Bankruptcy Act” and inserting “section 101 of title 11 of the United States Code” in lieu thereof; Ante, p. 2649.

6. 1978

   Pub. L. 95–598 § 308(a)(2) · 92 Stat. 2549

   Redesignated · 15 U.S.C. § 78eee(b)(1)(B)(E)

   Pub. L. 95–598, § 308(a)(2), (3), redesignated subpars. (C) to (E) as subpars. (B) to (D), respectively. Former subpar. (B), which provided for issuance of protective decree where court found that debtor had committed act of bankruptcy within meaning of Bankruptcy Act, was struck out

   Source evidence

   Code amendment note
   Subsec. (b)(1)(B) to (E). Pub. L. 95–598, § 308(a)(2), (3), redesignated subpars. (C) to (E) as subpars. (B) to (D), respectively. Former subpar. (B), which provided for issuance of protective decree where court found that debtor had committed act of bankruptcy within meaning of Bankruptcy Act, was struck out.

   Enacted provision · exact public law section
   (2) by striking out subparagraph (B) thereof; and

7. 1978

   Pub. L. 95–598 § 308(b) · 92 Stat. 2549

   Substituted · 15 U.S.C. § 78eee(b)(2)(A)(iii)

   Pub. L. 95–598, § 308(b), substituted “the United States having jurisdiction over cases under title 11” for “bankruptcy by the Bankruptcy Act”

   Source evidence

   Code amendment note
   Subsec. (b)(2)(A)(iii). Pub. L. 95–598, § 308(b), substituted “the United States having jurisdiction over cases under title 11” for “bankruptcy by the Bankruptcy Act”.

   Enacted provision · exact public law section
   (b) Section 5(b)(2)(A)(iii) of such Act (15 U.S.C. 78eee(b)(2)(A)(iii)) is amended by striking out “bankruptcy by the Bankruptcy Act” and inserting “the United States having jurisdiction over cases under title 11 of the United States Code” in lieu thereof.

8. 1978

   Pub. L. 95–598 § 308(c) · 92 Stat. 2549

   Substituted · 15 U.S.C. § 78eee(b)(2)(B)(iii)

   Pub. L. 95–598, § 308(c), substituted “any right of setoff, except to the extent such right may be affected under section 553 of title 11, and shall not abrogate” for “the right of setoff provided in section 68 of the Bankruptcy Act”

   Source evidence

   Code amendment note
   Subsec. (b)(2)(B)(iii). Pub. L. 95–598, § 308(c), substituted “any right of setoff, except to the extent such right may be affected under section 553 of title 11, and shall not abrogate” for “the right of setoff provided in section 68 of the Bankruptcy Act”.

   Enacted provision · exact public law section
   (c) Section 5(b)(2)(B)(iii) of such Act (15 U.S.C. 78eee(b)(2)(B)(iii)) is amended by striking out “, the right of setoff provided in section 68 of the Bankruptcy Act, and” and inserting in lieu thereof 11 USC 108. “any right of setoff, except to the extent such right may be affected under section 553 of title 11 of the United States Code, and shall not Ante, p. 2602. abrogate”.

9. 1978

   Pub. L. 95–598 § 308(d) · 92 Stat. 2549

   Substituted · 15 U.S.C. § 78eee(b)(3)

   Pub. L. 95–598, § 308(d), substituted “section 322 of title 11” for “the applicable provisions of the Bankruptcy Act”

   Source evidence

   Code amendment note
   Subsec. (b)(3). Pub. L. 95–598, § 308(d), substituted “section 322 of title 11” for “the applicable provisions of the Bankruptcy Act”.

   Enacted provision · exact public law section
   (d) Section 5(b)(3) of such Act (15 U.S.C. 78eee(b)(3)) is amended by striking out “the applicable provisions of the Bankruptcy Act” and inserting “section 322 of title 11 of the United States Code” Ante, p. 2562. in lieu thereof.

10. 1978

    Pub. L. 95–598 § 308(e) · 92 Stat. 2549

    Substituted · 15 U.S.C. § 78eee(b)(4)

    Pub. L. 95–598, § 308(e), substituted provisions relating to removal of proceeding to Bankruptcy Court for provisions relating to reference of proceeding to referee in bankruptcy

    Source evidence

    Code amendment note
    Subsec. (b)(4). Pub. L. 95–598, § 308(e), substituted provisions relating to removal of proceeding to Bankruptcy Court for provisions relating to reference of proceeding to referee in bankruptcy.

    Enacted provision · exact public law section
    (e) Section 5(b) of such Act (15 U.S.C. 78eee(b)) is amended by striking out paragraph (4) thereof and inserting in lieu thereof the following: “(4) Removal to Bankruptcy Court.— Upon the issuance of a protective decree and appointment of a trustee, or a trustee and counsel, under this section, the court shall forthwith order the removal of the entire liquidation proceeding to the court of the United States in the same judicial district having jurisdiction over cases under title 11 of the United States Code. The latter court shall thereupon have all of the jurisdiction, powers, and duties conferred by this Act upon the court to which application for the issuance of the protective decree was made.”.

11. 1978

    Pub. L. 95–598 § 308(f)(1) · 92 Stat. 2549

    1. Redesignated · 15 U.S.C. § 78eee(b)(5)(B)

       Pub. L. 95–598, § 308(f)(1), (2), (5), redesignated subpar. (C) as (B)

    2. Substituted · 15 U.S.C. § 78eee(b)(5)(B)

       Pub. L. 95–598, § 308(f)(1), (2), (5), substituted “title 11 governing applications for allowances under such title” for “the Bankruptcy Act governing applications for allowances under such Act”. Former subpar. (B), which covered allowances to a referee in bankruptcy or special master, was struck out

    Source evidence

    Code amendment note
    Subsec. (b)(5)(B). Pub. L. 95–598, § 308(f)(1), (2), (5), redesignated subpar. (C) as (B) and substituted “title 11 governing applications for allowances under such title” for “the Bankruptcy Act governing applications for allowances under such Act”. Former subpar. (B), which covered allowances to a referee in bankruptcy or special master, was struck out.

    Enacted provision · exact public law section
    (1) by striking out subparagraph (B);

12. 1978

    Pub. L. 95–598 § 308(f)(2) · 92 Stat. 2549

    1. Redesignated · 15 U.S.C. § 78eee(b)(5)(C)

       Pub. L. 95–598, § 308(f)(2), (3), (5), redesignated subpar. (D) as (C)

    2. Redesignated · 15 U.S.C. § 78eee(b)(5)(C)

       Pub. L. 95–598, § 308(f)(2), (3), (5), substituted “subparagraph (B)” for “subparagraph (C)”. Former subpar. (C) redesignated (B)

    Source evidence

    Code amendment note
    Subsec. (b)(5)(C). Pub. L. 95–598, § 308(f)(2), (3), (5), redesignated subpar. (D) as (C) and substituted “subparagraph (B)” for “subparagraph (C)”. Former subpar. (C) redesignated (B).

    Enacted provision · exact public law section
    (2) by striking out “the Bankruptcy Act governing applications for allowances under such Act” in subparagraph (C) and inserting “title 11 of the United States Code governing applications for allowances under such title”;

13. 1978

    Pub. L. 95–598 § 308(f)(2) · 92 Stat. 2549

    1. Redesignated · 15 U.S.C. § 78eee(b)(5)(D)

       Pub. L. 95–598, § 308(f)(2), (4), (5), redesignated subpar. (E) as (D)

    2. Redesignated · 15 U.S.C. § 78eee(b)(5)(D)

       Pub. L. 95–598, § 308(f)(2), (4), (5), substituted “Section 504 of title 11” for “the Bankruptcy Act”. Former subpar. (D) redesignated (C)

    Source evidence

    Code amendment note
    Subsec. (b)(5)(D). Pub. L. 95–598, § 308(f)(2), (4), (5), redesignated subpar. (E) as (D) and substituted “Section 504 of title 11” for “the Bankruptcy Act”. Former subpar. (D) redesignated (C).

    Enacted provision · exact public law section
    (2) by striking out “the Bankruptcy Act governing applications for allowances under such Act” in subparagraph (C) and inserting “title 11 of the United States Code governing applications for allowances under such title”;

14. 1978

    Pub. L. 95–598 § 308(f)(5) · 92 Stat. 2549

    Redesignated · 15 U.S.C. § 78eee(b)(5)(E); 15 U.S.C. § 78eee(b)(5)(F)

    Pub. L. 95–598, § 308(f)(5), redesignated subpar. (F) as (E). Former subpar. (E) redesignated (D)

    Source evidence

    Code amendment note
    Subsec. (b)(5)(E), (F). Pub. L. 95–598, § 308(f)(5), redesignated subpar. (F) as (E). Former subpar. (E) redesignated (D).

    Enacted provision · exact public law section
    (5) by redesignating subparagraphs (C), (D), (E), and (F) as subparagraphs (B), (C), (D), and (E), respectively.

15. 2005

    Pub. L. 109–8 title IX § 911 · 119 Stat. 23

    Added · 15 U.S.C. § 78eee(b)(2)(C)

    Pub. L. 109–8 added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (b)(2)(C). Pub. L. 109–8 added subpar. (C).

    Enacted provision · exact public law section
    SEC. 911. SIPC STAY.   Section 5(b)(2) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding at the end the following new subparagraph: “(C) Exception from stay.— “(i) Notwithstanding section 362 of title 11, United States Code, neither the filing of an application under subsection (a)(3) nor any order or decree obtained by SIPC from the court shall operate as a stay of any contractual rights of a creditor to liquidate, terminate, or accelerate a securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, or master netting agreement, as those terms are defined in sections 101, 741, and 761 of title 11, United States Code, to offset or net termination values, payment amounts, or other transfer obligations arising under or in connection with one or more of such contracts or agreements, or to foreclose on any cash collateral pledged by the debtor, whether or not with respect to one or more of such contracts or agreements. “(ii) Notwithstanding clause (i), such application, order, or decree may operate as a stay of the foreclosure on, or disposition of, securities collateral pledged by the debtor, whether or not with respect to one or more of such contracts or agreements, securities sold by the debtor under a repurchase agreement, or securities lent under a securities lending agreement. “(iii) As used in this subparagraph, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a national securities exchange, a national securities association, or a securities clearing agency, a right set forth in a bylaw of a clearing organization or contract market or in a resolution of the governing board thereof, and a right, whether or not in writing, arising under common law, under law merchant, or by reason of normal business practice.” .

16. 2006

    Financial Netting Improvements Act of 2006

    Pub. L. 109–390 § 5(c) · 120 Stat. 2692

    1. Inserted · 15 U.S.C. § 78eee(b)(2)(C)(iii)

       Pub. L. 109–390 inserted “a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991),” after “rule or bylaw of”

    2. Substituted · 15 U.S.C. § 78eee(b)(2)(C)(iii)

       Pub. L. 109–390 substituted “a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act),” for “or a securities clearing agency, a right set forth in a bylaw of a clearing organization or contract market”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(C)(iii). Pub. L. 109–390 inserted “a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991),” after “rule or bylaw of” and substituted “a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act),” for “or a securities clearing agency, a right set forth in a bylaw of a clearing organization or contract market”.

    Enacted provision · exact public law section
    (c) SIPC Stay.— Section 5(b)(2)(C)(iii) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)(iii)) is amended— (1) by inserting “a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991),” after “rule or bylaw of”; and (2) by striking “or a securities clearance agency, a right set forth in a bylaw of a clearing organization or contract market” and inserting “a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act),”.

17. 2010

    Investor Protection and Securities Reform Act of 2010

    Pub. L. 111–203 title IX § 929H(b) · 124 Stat. 1376

    1. Amended · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 designated existing provisions as subpar. (A) relating to general rule

    2. Inserted · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 inserted heading

    3. Substituted · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 substituted “SIPC may, upon notice to a member of SIPC, file an application for a protective decree with any court of competent jurisdiction specified in section 78u(e) or 78aa of this title, except that no such application shall be filed with respect to a member, the only customers of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 78fff–3 of this title, if SIPC determines that—” for “If SIPC determines that—”, in subpar. (A) relating to failure to meet obligations

    4. Substituted · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 substituted “the member” for “any member of SIPC”, in subpar. (B) relating to conditions

    5. Substituted · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 substituted period for comma at end

    6. Added · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 added subpar. (B) relating to consent requirement

    7. Struck · 15 U.S.C. § 78eee(a)(3)

       Pub. L. 111–203 struck out concluding provisions which read as follows: “SIPC may, upon notice to such member, file an application for a protective decree with any court of competent jurisdiction specified in section 78u(e) or 78aa of this title, except that no such application shall be filed with respect to a member the only customers of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 78fff–3 of this title.”

    Source evidence

    Code amendment note
    Subsec. (a)(3). Pub. L. 111–203 designated existing provisions as subpar. (A) relating to general rule, inserted heading, substituted “SIPC may, upon notice to a member of SIPC, file an application for a protective decree with any court of competent jurisdiction specified in section 78u(e) or 78aa of this title, except that no such application shall be filed with respect to a member, the only customers of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 78fff–3 of this title, if SIPC determines that—” for “If SIPC determines that—”, in subpar. (A) relating to failure to meet obligations, substituted “the member” for “any member of SIPC”, in subpar. (B) relating to conditions, substituted period for comma at end, added subpar. (B) relating to consent requirement, and struck out concluding provisions which read as follows: “SIPC may, upon notice to such member, file an application for a protective decree with any court of competent jurisdiction specified in section 78u(e) or 78aa of this title, except that no such application shall be filed with respect to a member the only customers of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 78fff–3 of this title.”

    Enacted provision · exact public law section
    (b) Liquidation of a Carrying Broker-dealer.— Section 5(a)(3) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(a)(3)) is amended— (1) by striking the undesignated matter immediately following subparagraph (B); (2) in subparagraph (A), by striking “any member of SIPC” and inserting “the member”; (3) in subparagraph (B), by striking the comma at the end and inserting a period; (4) by striking “If SIPC” and inserting the following: “(A) In general.— SIPC may, upon notice to a member of SIPC, file an application for a protective decree with any court of competent jurisdiction specified in section 21(e) or 27 of the Securities Exchange Act of 1934, except that no such application shall be filed with respect to a member, the only customers of which are persons whose claims could not be satisfied by SIPC advances pursuant to section 9, if SIPC” ; and (5) by adding at the end the following: “(B) Consent required.— No member of SIPC that has a customer may enter into an insolvency, receivership, or bankruptcy proceeding, under Federal or State law, without the specific consent of SIPC, except as provided in title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.” .

    Effective date note
    Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.

37 of 37 references resolved to an enrolled provision