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 or is approaching financial difficulty, it shall immediately notify SIPC, and, if such notification is by a self-regulatory organization, the Commission.
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.
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 [12 U.S.C. 5381 et seq.].
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 person 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 section 322 of title 11, except that neither SIPC nor any employee of SIPC shall be required to file a bond when appointed as trustee.
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. The latter court shall thereupon have all of the jurisdiction, powers, and duties conferred by this chapter upon the court to which application for the issuance of the protective decree was made.
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 considers appropriate.
Any person seeking allowances shall file with the court an application which complies in form and content with the provisions of title 11 governing applications for allowances under such title. A copy of such application shall be served upon SIPC when filed. The court shall fix a time for a hearing 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.
Whenever an application for allowances is filed pursuant to subparagraph (B), 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 chapter 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 SIPC.
The restrictions on sharing of compensation set forth in section 504 of title 11 shall apply to allowances.
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.
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 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.
The Commission may, on its own motion, file notice of its appearance in any proceeding under this chapter and may thereafter participate as a party.
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.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in subsec. (a)(3)(B), is Pub. L. 111–203,
The 1934 Act, referred to in subsec. (b)(1)(C), means act June 6, 1934, ch. 404, 48 Stat. 881, known as the Securities Exchange Act of 1934, which is classified principally to chapter 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see section 78a of this title and Tables.
This chapter, referred to in subsecs. (b)(2)(A)(iii), (5)(C), and (c), was in the original “this Act”, meaning Pub. L. 91–598,
The Commodity Exchange Act, referred to in subsec. (b)(2)(C)(iii), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables.
The Federal Deposit Insurance Corporation Improvement Act of 1991, referred to in subsec. (b)(2)(C)(iii), is Pub. L. 102–242,
2010—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.”
2006—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”.
2005—Subsec. (b)(2)(C). Pub. L. 109–8 added subpar. (C).
1978—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).
Subsec. (b)(1)(A). Pub. L. 95–598, § 308(a)(1), substituted “section 101 of title 11” for “the Bankruptcy Act”.
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.
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”.
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”.
Subsec. (b)(3). Pub. L. 95–598, § 308(d), substituted “section 322 of title 11” for “the applicable provisions of the Bankruptcy Act”.
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.
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.
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).
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).
Subsec. (b)(5)(E), (F). Pub. L. 95–598, § 308(f)(5), redesignated subpar. (F) as (E). Former subpar. (E) redesignated (D).
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).
Subsec. (d). Pub. L. 95–283, § 7(c), added subsec. (d).
Amendment by Pub. L. 111–203 effective 1 day after
Amendment by Pub. L. 109–390 not applicable to any cases commenced under Title 11, Bankruptcy, or to appointments made under any Federal or State law, before
Amendment by Pub. L. 109–8 effective 180 days after
Amendment by Pub. L. 95–598 effective