I

113TH CONGRESS 1ST SESSION

H. R. 827

To amend the Securities Investor Protection Act of 1970 to provide onetime payments from the SIPC Fund for customers during a pending lawsuit by the Securities and Exchange Commission against the Securities Investor Protection Corporation, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 26, 2013 Mr. CASSIDY (for himself and Mr. DEUTCH) introduced the following bill; which was referred to the Committee on Financial Services

A BILL
To amend the Securities Investor Protection Act of 1970 to provide one-time payments from the SIPC Fund for customers during a pending lawsuit by the Securities and Exchange Commission against the Securities Investor Protection Corporation, and for other purposes. 1 Be it enacted by the Senate and House of Representa-

2 tives of the United States of America in Congress assembled, 3 4
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SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Improving Security

5 for Investors and Providing Closure Act of 2013’’ or the 6 ‘‘Improving SIPC Act of 2013’’.

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SEC. 2. CUSTOMER PAYMENT DURING PENDING ACTION.

(a) IN GENERAL.—Section 11 of the Securities Inves-

3 tor Protection Act of 1970 (15 U.S.C. 78ggg) is amend4 ed— 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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(1) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and (2) by inserting after subsection (b) the following: ‘‘(c) CUSTOMER PAYMENT DURING PENDING ACTION.—

‘‘(1) ONE-TIME ‘‘(A) IN

PAYMENT PERMITTED.—

GENERAL.—At

the time that an

action is initiated under subsection (b), SIPC may choose to allow all customers of the debtor to elect to receive a one-time payment from the SIPC Fund. ‘‘(B) CUSTOMER
ELECTION.—If

SIPC al-

lows customers to make the election described under subparagraph (A), each customer choosing to make such election must make such election during the action brought under subsection (b), but in no case later than the 180-day period beginning on the date that SIPC chooses to allow such election. ‘‘(2) METHOD
OF PAYMENT.—

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‘‘(A) IN

GENERAL.—To

the extent prac-

ticable, one-time payments made under this subsection shall be made in the same manner as payments of net equity claims of customers of a debtor are made under the other provisions of this Act. ‘‘(B) PAYMENT
CLAIMS.—The AMOUNT LIMITED TO

amount paid to a customer

under this subsection shall be equal to the lesser of— ‘‘(i) the customer’s net equity claim against the debtor; and ‘‘(ii) the cap set under paragraph (3). ‘‘(3) CAP
ON ONE-TIME PAYMENTS.—At

the

time the action is initiated under subsection (b), SIPC shall set a cap on the amount of one-time payments that can be made under this subsection, and such cap— ‘‘(A) shall not exceed $500,000; and ‘‘(B) shall apply equally to all customers of the debtor. ‘‘(4) EFFECT
OF ELECTION.— SIPC ADVANCE.—Section

‘‘(A) NO

9(a)

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shall not apply with respect to any customer

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who receives a one-time payment under this subsection. ‘‘(B) SUBROGATION.—With respect to any customer who receives a one-time payment under this subsection, SIPC shall be subrogated to all rights of such customer against the debtor once the customer recovers an amount equal to the customer’s net equity claim against the debtor. ‘‘(5) NOTICE;
TECHNICAL ASSISTANCE.—If

SIPC allows customers to make the election described under paragraph (1)(A), SIPC shall— ‘‘(A) promptly notify each customer of the debtor of their rights under this subsection; and ‘‘(B) provide technical assistance to such customers to determine if they should make an election under paragraph (1)(B). ‘‘(6) TREATMENT
POSIT.—For OF CERTIFICATES OF DE-

purposes of this subsection, a certifi-

cate of deposit purchased by a person through an account with the debtor shall be treated as cash deposited and held by the debtor in an amount equal to the amount the person paid for the certificate of deposit, less any amounts paid to such person on the certificate of deposit.

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5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 ‘‘(7) JUDICIAL
REVIEW OF CERTAIN SIPC DE-

TERMINATIONS.—With

respect to any person who is

not permitted to make an election under this subsection because SIPC does not identify them as a customer of the debtor, such person may commence an action against SIPC in the appropriate United States district court to challenge the determination by SIPC that they are not a customer of the debtor. ‘‘(8) RULEMAKING.—SIPC may issue such regulations as may be necessary to carry out this subsection. ‘‘(9) DEBTOR
DEFINED.—For

purposes of this

subsection, the term ‘debtor’ means the broker or dealer that is the subject of the action brought under subsection (b).’’. (b) APPLICATION.—With respect to an ongoing ac-

17 tion brought under section 11(b) of the Securities Investor 18 Protection Act of 1970 (15 U.S.C. 78ggg(b)) before the 19 date of the enactment of this Act, the customer election 20 available under section 11(c) of such Act may be made 21 during the 180-day period beginning on the date of the 22 enactment of this Act. 23
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(c) RULE

OF

CONSTRUCTION.—A person’s qualifica-

24 tion as a customer for purposes of section 11(c) of the 25 Securities Investor Protection Act of 1970 shall have no
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6 1 effect on whether such person qualifies as a customer 2 under any other provision of such Act.

Æ

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