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HELLER TELECDPfER (212) 69B-_;e_,Sg






July 3, 2003




By Hand The Hon. The Hon. The Hon. United 40 Foley New

Delivery Chester J. Straub Rosemary S. Pooler David N. Hurd Court of Appeals I0007 Re: In re: New (Argument Times Date: for the Second Circuit


States York,

Square New York



No. 02-6166

June 26, 2003)


of the Court:

This letter addresses deference the Brief Support response particular, Prezioso, owed to the position of the SEC. Amicus of the Position to a request Esq., Curiae,

the Court's In Partial (the "SEC

request Support Brief').

for the parties of the Position address

to brief the issue (the "SEC"), Appellants the case, therein."

of the as stated in P. in

of the Securities

and Exchange


and in Partial including, Letter in to Giovanni

of Appellees from the Court Counsel

The SEC Brief was filed with the Court

for the SEC to "generally from the Clerk three

the applicability SEC General In its Brief,

of the Series

500 Rules to the facts presented of the Court. on issues under [SIPA raised Section

the SEC stated claims

positions be classified

on appeal. as "claims legitimate


the SEC


its opinion Protection

that appellees' to SIPA coverage


9(a) of the Securities for securities," the Act in expectations position ("SEC of

Investors accordance customers,

Act of 1970 ("SIPA"

or the "Act") history, agreed

78fff-3(a)] purpose,

and are entitled

up to $500,000. legislative 500 Rules,

On this issue, legislative

the SEC, interpreting

with, inter alia, the Act's and the goal of the Series

with the customer-claimants' Court's claims.

Position r'). The SEC, however, rejected the broker-dealer in valuing the customers'

the District securities

reliance on the account .^^.._._[il_statements fr The SEC stated that such _c_uuilr

HELLER, Page 2 claims dealer Rules






be valued

by the actual of the securities. to resolve III"), while statements

amount ("SEC explaining

of money Position

deposited II").

by the customer of claims which based

with the brokerthe Series fictitious upon customer 500 Rules 500 upon

for the purchase were not applicable ("SEC


the SEC found

the question to classify

of classification customer ofSIPA degree claims

securities should


that in its view the principle 78fff-3(a)

of reliance


and account

is found

in the Series

also be used as a guide As explained

to the interpretation a significant statements

in this case. should be given

SEC Brief at 13. to SEC Positions which interpreting (in appellees' issue In to be afforded controversy. in a SIPA constructions has the

below, interpretive

of deference

I and II, as they are formal been entrusted view) the Series here, by Congress 500 Rules, appellees Act and by the exercise presented any case, offered liquidation

by the agency authority over

of the federal However, apply

government of rules because

to administer by their plain apply

SIPA by, inter alia, the promulgation SIPC. language, the Series below, unambiguously 500 Rules no deference

of plenary submit

supervisory that this Court discussed

to the classification the instant

need not address

the level of deference to resolve can be given to statutory Trustee

to SEC Position by SIPC

III and can instead of reasons in support of claim

for a variety proceeding. A.


made by a SIPC-appointed

SEC's reflect,

Plenary Congress

Oversight envisioned SIPA


With Respect plenary

to S/PC.

As both the Act and its by an act of SIPC is not an

legislative Congress agency

history (SIPA

that although have

SIPC was established oversight of SIP(_.

78ccc(a)(1)), government.

the SEC would

of the federal

78ccc(a). is an amendment member to the Securities assessments and SEC

SIPA provides, Exchange (SIPA loans Act of 1934 (SIPA 78ccc(a)(2)(B)), to SIPC (SIPA by notifying

inter alia, that the Act itself 78bbb); and rules (SIPA (d)(l), (SIPA 78eee(1)) 78eee(c)). functions a court

the SEC has final review 78ccc(e)(1)-(3)),

and say as to SIPC membership initiation of a SIPA

bylaws 78ddd(c)(l),

(g)); and the SEC can facilitate _ Apart order yearly

proceeding proceeding provides protection (SIPA (SIPA


and has the fight to participate from the foregoing, (SIPA 78 ggg(a)); requiring reports that if SIPC

in any SIPA the Act explicitly fails to act for the its obligations of SIPC 78ggg(c)(2)).

as a party-in-interest of customers,

that the SEC has rule-making 78ggg(b)); 78ggg(c)(l));

the SEC can obtain

SIPC to discharge to the SEC (SIPA

that the SEC has the authority and that SIPC must provide

to conduct


and inspections

i Here, the SEC, which filed the original civil action against Goren, New Age and New Times (JA-762), notified SIPC of the need for SIPC involvement and appeared in this proceeding as a party in interest from the outset. On the SEC's motion, the District Court referred this SIPA proceeding to the United States Bankruptcy Court for the Eastern District of New York. JA-763. Thus, while the SEC submitted its amicus brief at the invitation of the Court, the SEC has been actively involved in this proceeding from the outset, and has had detailed familiarity with a//the issues involved throughout the course of the proceeding. This familiarity and involvement is an additional factor supporting the deference that should be accorded the SEC Positions.

HELLER, Page 3




(154650. I)

B. When a federal which has been

Judicial court interpreted


to Administrative agency and Mead,

Interpretations a statutory to whom cited

of Statutory

Schemes. interpretive by which to

is faced with the need to construe by an administrative cases, Chevron

ambiguity Congress

or fill a gap in a statute has delegated the means

authority, measure highest Council, agency's Court intent States

two Supreme the degree Inc.,




of judicial


owed to expressions in Chevron which better U.S.A, directs possible

of such interpretive Resources

authority. Defense

The very

level of deference interpretation focused, to delegate v. Mead

is described provided

htc. v. Natural interpretation

467 U.S. 837, 843 (1984), always that other, the primary the forms notwithstanding as a prerequisite to an agency delineate Corp., Thus,

that courts

must defer to such administrative is a permissible are presented. manifestation expressions deference rule-making construction the In Chevron,

that such agency's on need interpretive which agency

of the statute,

interpretations for a positive authority interpretive

to deference,

of Congressional in question United where Mead, Health 533 or their could take.

with respect

to the statute was warranted authority.

and did not precisely an agency equivalent Center interpretation

533 U.S. 218 (200 l) instructed was made "in the exercise regulations the "gold promulgated standard"

that Chevron of" the agency's pursuant

U.S. at 227.


to notice

and comment


have become

for Chevron


See, e.g., Community

v. Wilson-Coker, In Mead,

311 F.3d 132, 138 (2d Cir. 2002). the Court a statute answered." further explained make that deference was not an "either-or" observed choices, courts Court's proposition, not all of the

but that there charged those agencies deference product the ruling U.S. deference), choices have



of deference. necessarily them,

533 U.S. at 220. 2 The Court all sorts of interpretive may influence the Circuit they certainly

that "agencies and while questions decision

with applying already

bind judges

to follow


533 U.S. at 227. Vacating ruling at issue in Mead, procedures rule-making

to give no was not the owed to to Chevron

to the Customs of formal using notice factors Under

Department and comment identified

on the ground (and hence decision, the degree

that the ruling not entitled of deference

the Court remanded

to permit

the court below in its earlier deference

to assess

by the Court


v. Swift & Co., 323 interpretation and enforcement of its reasoning,

134 (1944). Mead,

Mead/Sla'dmore, without

can be accorded "policy statements, of deference

to art agency's agency manual

"whatever guidelines." interpretations

its form,"

including upon

limitation, The degree

533 U.S. at 234.

due to such administrative the validity


"the thoroughness


in its consideration,

2 In addition to rejecting

deference as an either-or choice, the Supreme Court in Mead also made clear that

it is not only regulations promulgated through formal notice and comments procedures that can be entitled to Chevron deference. Id. at 2173 and n. 13 (noting that by long-standing precedent the deliberative conclusions of the Comptroller of the Currency are entitled to deference). Even more recently, the Supreme Court confirmed that Chevron deference can be warranted in the absence of formal regulations. Barnhart v. Walton, 122 S.Ct. 1265, 1271 (2002) ("[T]he fact that the [Social Securit)/Administration] previously reached its interpretation of through means less formal than "notice and comment" rulemaking, [citation omitted] does not automatically interpretation of the judicial deference otherwise its due.") deprive that

HELLER, Page 4


_. FEW,



its consistency persuade[.]"

with earlier Mead, C..

and later pronouncements, Skidmore).

and all those



give it power


533 U.S. at 219 (quoting Under Mead/Skidmore


the SEC's dispute

Interpretation that Congress


Is Owed the the of out

a Significant clear intent

Measure to delegate S.D.N.Y.

of Deference. 467 U.S. at 843-44; 1998) (rules afforded require

It is beyond In re Adler.

has manifested rules carrying 218 B.R. 689,

to the SEC the authority promulgated

to interpret


by promulgating Clearing Corp.,

force of law. Chevron, 699 (Bankr. law). may,


by the SEC under rule-making or appropriate or repeal Securities that Congress is obligated Center,

SIPA have the force and effect authority under SIPA: interest "the [SEC] or to carry Corp. v. in the public



the SEC p!enary to be necessary

by such rules

as it determines

the purposes adopted." Barbour, upon Mead,

of [SIPA],

SIPC to adopt, (describing alone,


any SIPC bylaw Investor intended to carry authority

or rule, whenever under SIPA). Based

SIPA 78tee(e);

see also, SIPA

78ggg(a); it is clear


421 U.S. 412, 417 (1975) manifestations under

the SEC' s rule-making

these statutory

the SEC to have primary out this Congressional intent.



the Act and the Court Community

533 U.S. at 230, n.l 1. Accord As explained infra, position under to assess the Court


311 F.3d at 138. of a deliberative authority, and formal under position process of it is

the SEC Brief of the SEC. the deference

is the product delegated

and represents regulations necessary Following issue subject

the official


however, law-making

that it is not the equivalent Mead, Skidmore of the agency

promulgated for the Court Skidmore,

Congressionally must consider Some aspects

due to the SEC Brief by applying the form in which position of the statutory the interpretive found and the expertness interpretation consistency,

factors. is expressed, on the -

its consistency,

the. persuasiveness to interpretation.

of the agency's analysis

in the SEC Brief, and expertise

which are pertinent to Sk_'dmore are summarized as follows:

- i.e., formality,


Form. rendered "unworthy unless amicus at 462. "post the argument



has frequently

been of Labor,


to administrative the Supreme Court

interpretations rejected brief were (holding brief, the ld. because

as am icus curiae. of deference." Circuit

In A uer v. Robbins, See also Demaria

519 U.S. 452 (1997),

that the interpretations was "bound erroneous

of the Secretary by the SEC's or inconsistent of the Court,

in the form of an amicus of its regulations Here,

v. Andersen,

318 F.3d 170, 175 (2d Cir. 2003) as in Auer,

that the Second

interpretations there

in its amicus that the

they are 'plainly

with the regulations'"). judgment

brief was filed at the request does not reflect Just as the Court hoc rationalization in Auer advanced

can be no "no reason asserted to defend

to suspect


the agency's observed

fair and considered that the position seeking

on the matter action

in question." against attack,"

in the amicus past agency

brief was not a

by an agency motive

id., so too in this case, no self-serving

can be attributed

to SEC.

HELLER, Page 5


_. FEW,



Nor is the filing Curiae," treated casually are advised that no such brief

of a "Brief

of the Securities represents

and Exchange the formal

Commission, position

Amicus vote. to the the matter in an in We

by the SEC.

Such a brief its position which could School

of the SEC and we by formal request, the Staffmet

will be filed without in structured against

the approval in response have

of the Commission, to the Court's regulations which

are also advised with both parties Commission. question amicus (although regulations Health brief the Medicaid brief.

that prior to formulating and participated The fact that an agency See, Cedar Rapids

deliberations deference District

to arrive

at its recommendations clarifying first appears

promulgated v. Garret

has not done so, does not argue agency's on matter statute Center, position

on interpretation authority


F., 526 U.S. 66, 75, n.6 promulgated Community of in an amicus

had been unclear

and despite

to do so it had not in amicus turns brief);

at issue, the Court


to position


311 F.3d at 137, n.8 ("[a]lthough to some deference

our conclusion 3


on an interpretation

itself, we note that any interpretation from the court").

of the Medicaid


form is entitled

Validity; "[D]isregards broker-dealer SEC Positions enactment arguments. SEC rejects of SIPC's 78fff-3(b) discharging demonstrates historically were SIPA's grafted of customers," derive SIPA, SIPC's construction pervades First,

Persuasiveness. purpose

According of [SIPA

to the SEC,



in this case, expectations role in the of the SEC's the At the core in SIPA of duties however, in by SIPC, of

the legislative

78fff-3(b)]," the fundamental administrative proceeding


the reasonable the SEC's relied distinction upon

and "undermine[s] neutrality "strict

goal of SIPA." expertise,

SEC Brief at 14. The power

their power the SEC's upon purported

from the SEC's in this

and by the persuasive


its own close


of the provisions coverage


of the Act as incorrect

and misguided. found

is its argument the Act, is "integral" SIPA 78fff-2(b)

that the cash/securities and SIPA

to it and is purposefully The SEC analysis the different


with other provisions history,

the Act [principally

78111(1 I)] pertaining distinction coverage

to the Trustee's is "integral" levels

the obligations incorrect.

of the debtor.

of the legislative

that the view of SIPC that the cash/securities As explained provision by the SEC, onto a single of the Act [SIPA unrelated had already

to the Act, is prior to and only statutory

for cash and securities

78fff-3(b)] been

in the final moments remedial within purposes disparate

enactment SIPC's

for extrinsic interrelated desire


to the Act's

principal finalized. consistency

after the supposedly "reasonable"


SEC Brief at 11-12. However

to find "cash-versus-securities"

3 We also note, the Circuit. such Although

as SIPC suggests

has conceded,

that the issue presented

on appeal

is a matter

of first impression routinely litigated, presented


SIPC Given

that the claim classification and distinguishable at 15), it is hardly amicus

of fictitious sparse surprising judicial

securities record

has been

is not the case. (as noted issues

the unpersuasive SEC Brief

on the question hm not "weighed believes

on appeal specific raised

by the SEC,

that the SEC in this case,

in" on these

in the past.

As reflected

in the SEC's

position absent

the SEC

that the issues

can be resolved Given such

as a matter

of statutory


the need

for promulgation

of any further (although the weight a party to be to these

regulations. proceedings) accorded

the SEC's


supervisory through

role over the amicus

SIPC, filing

the fact that the SEC does not detract from

has chosen views.

to express

its views

HELLER, Page 6





provisions SIPA[.]"





the effort


in "undermin[ing]

the fundameiatal

goal of

SEC Brief

at 14. the SEC's regulation analysis implicitly rejects the "policy reasons" which remedial pertaining to the

Furthermore, wider issues of securities

(as to which properly the power

the SEC has singular takes into account customers distinctions of persuasion

expertise) the actual which

were used by purpose of of the SEC that

.SIPC to support the Act. approach position. statutes whenever

its approach

and instead also draws treatment

The SEC Position on the grossly This should Circuit

from the ameliorative results of the Supreme and unreasonable 194 F.3d 363,371



of like-situated untenable

from SIPC's Court results (2d Cir.

has consistently to avoid

been attentive to avoid L.P. v. Banco

to the admonition de la Nacion,

be interpreted American


Elliot Associates, Tobacco

1999) (citing

Co. v. Patterson, taken

456 U.S. 63, 71 (1982)). by the SEC Brief 500 Rules, and account and gives rather is best served are consistent when with the purpose the criterion at the Under of the dealers of broker In contrast, to the

Consistency. longstanding are protected SIPC position capricious pertaining request purchase these previously policy, which Act - promoting confidence

The positions finds expression in the securities upon written conduct losses

in the Series marketsconfirmations purpose

that the overarching customers consequence statements.

in their reliance and criminally either

is at odds with this fundamental motivated conduct, approach to customer a uniform (actual there weighed


of the broker-dealer or expectations. involving of statutory litigated on behalf

than to any cognizable


the SEC is now articulating, (but non-occurring) of a broker dealer. the SEC has not customers because

of the Court, of securities publically _ircumstances,

to all claims to withhold

the purported merely issue.

and fictitious)

is no reason


in on this infrequently

Expertise. markets. PBW Stock

The SEC is the agency lnc. v. S.E.C., broad


with oversight

of the nation's 1973) ("It]he

securities Exchange oversee of the


485 F.2d 718, 722 (3d Cir. sufficiently of which of securities York Stock industry broad its oversight

Act was carefully the securities to the regulation investing public.


to give the [SEC] powers The SEC's oversight, the administration

that it could effectively and the protection Inc., 346 F. Supp. 1, 4 (D.D.C. fraud interest


of SIPC is a part, extends

of broker-dealers, See Robert

exchanges, Exchange,

W. Stark, Jr., Inc. v. New Blinder, Industries, Robinson with overseeing with "primary

217, 227 (S.D.N.Y. 1987) ("It]he of stocks federal and bonds"); securities

1972); S.E.C.v. Chris-Craft

& Co., Inc., 681 F. Supp. and preventing Corp., the public

SEC is charged

the securities responsibility

in the trading under the

Inc. v. Piper Aircraft

480 F.2d 341 (2d

Cir. 1973) (the SEC entrusted laws").

of protecting

The SEC thus has vast experience policies presented in this case. Clearly,

and great

expertise qualified

in respect to express

of the issues an opinion

and as to what

the SEC is uniquely

HELLER, Page 7


_. FEW,



sort of investments impact




"for securities"


SIPA and to weigh securities markets.

the broader

of the treatment D.

of these customers'claims Need

on the nation's Not Reach

The Court Alternatively Opinion Face.

the Issue

of Deference 500 Rules; the Rules procedure there even is the reaching as and comment and to which 500 Rules Before

to be Afforded are Clear by an agency express the issue kind of agency congressional to application (declining (although agency Series

to the SEC's

on the Applicability promulgated a statutory

of the Series scheme

on their

As formal regulations to administer to engage

aRer a notice (SIPA)

(the SEC) entrusted authorization however, interpretation delegation

Congressional of deference,

in rule-making, a regulation

the Series promulgated County, Center,

are precisely with a

of a statute which in interpreting

calls for full Chevron


in accordance

of rule-making to agency


a court must find that the regulation v. Harris Medical of its own regulation

is ambiguous on its

to the issue in controversy. deference Shalala deferential

Christensen interpretation

529 U.S. 576, 588 (2000) where regulation, 50 F.3d 522 (Sth Cir. 1995) of its own regulation, submitted that the As the District by their plain at pp. 11-14.

to accord exceptionally

face, was not ambiguous); is not permitted 500 Rules

v. St. Paul-Ramsey standard applies unstated

to an agency's requirements).

interpretation It is respectfully

to imply additional by Claimants

apply on their face to the issue on appeal issue presented with respect

and are not ambiguous. the Series

Court held and as argued language,

in their Brief on appeal, of the promulgation to trades

500 Rules, Appellees

apply to the classification to uncertainties arising

here. Brief for Claimants of the Rules straddled Notably, which

While that the SEC points out that the history were directed regulatory where history

shows that the Rules

the filing date, this in support of its position on the circumstances of See SEC Brief at

does dot permit the application of the regulation do not apply here, no arguments based

of the Rules

to be limited to such circumstances exclusively

the plain language 500 Rules and makes

has a broader


that the Series their adoption 18.

the SEC Brief relies

on the text of the Rules


Like the SEC, to argue argument applied assertion "actual" limiting securities[.]'" that they do not apply based upon in determining 17 C.F.R. whether

SIPC here.

relies primarily SIPC Brief,

on the promulgating at pp. 31-32. which gives SIPC's states


of the Series 500 Rules consists

500 Rules "will be for of an

Additionally, that the rise to a 'claim only textual

SIPC makes Series argument

a textual

Rule 500 of the Series a securities (emphasis 300.500

500 Rules transaction added).

for cash' or a 'claim

that it is implicit in the language of Rule 500 that the applicability securities transaction or that "a 'securities transaction' must exist." implications the Series where of the term "securities 500 Rules a customer transaction" directed cannot withstand

of the Rules is limited to an Id. This assertion as to the examination of the Rules. -To

the contrary, circumstances

are explicitly has authorized confirmed,

to "non-existent (either no transaction, classify

securities much

transactions" less a securities claim

a transaction but where

a purchase

or sale of securities),

such transaction transaction,

has been


has taken


at all. In such


the Rules

the customer

as if the

HELLER, Page 8






had occurred

provided Brief

that a confirmation at 12.

of the non-occurring


was sent by

the broker-dealer.

Appellees' Should

the Court

agree that the Rules level

are clear on their face, it is submitted of deference. Where Claimants as to the applicability a regulation

that the that if, 500 as to it is

Court Rules, clearly


not reach

the issue of the appropriate is owed v. Robbins, to the SEC's

do not dispute is ambiguous unless

on the other hand, Chevron erroneous. the precise

the Court

finds that Rule 500 is ambiguous interpretation. an agency's interpretation

of the Series

deference Auer

issue in contest,

of its own regulation

is controlling

519 U.S. 452 (1997).

E. No Deference Interpretation. the Trustee pointedly Protection establishment obstacle implicit In contrast with respect states: "There Corporation" to deference, or explicit number of reasons, absolutely

is Due to Either owed deference no judicial


or the Trustee

on Issues

of Statutory for a of either SIPC or creating SIPC Investor or the 467

to the deference

to the SEC Positions can be afforded corporate

stated in the SEC Brief, provision

to the position

to the construction is hereby established (hereat_er... is the absence

of SIPA. The very statutory a body to as "SIPC")... SIPC 78ccc(a). rationale weight interpretive it is entrusted is to follow

to be known as the "Securities SIPC shall not be an agency Closely related authority. for all degrees or legislative of judicial to this first


of the United

States Government." to delegate scheme

of the underlying


intent of Congress have long recognized

See Chevron, to an executive the Act

U.S. at 844 ("[w]e department's contemplates promulgation proposed

that considerable rules for adoption, and is consistent to administer administration to supervise liquidation, claims based

should be accorded

construction of such rules.

of a statutory

to administer").

4 Although authority

that the SIPC maypropose

the SEC has exclusive an SEC determination of SIPA."

over the

Such promulgation

that any such

rule "is in the public interest Rather than being

with the purposes or interpret SIPC." nothing upon, SIPA, Barbour,

entrusted whose

SIPC functions

as a to the a has While of the SIPA

component SIPA debtor provides below, court. trustee


a statutory an active

scheme "plenary

and interpretation

has been delegated 421 U.S. at 417. .... all obligations [.]" Notably,

SEC to whom any discretion

is also given is given in the

authority of the duties

role in a SIPA to, or net equity by a claim review is entitled

in SIPA suggests securities or cash

that the Trustee

performance relating

at issue here: to "discharge

to a customer are dominated The availability

that any person


determination is "at odds"

by a SIPA



as discussed by the bankruptcy See Mead, to statutory

by SIPC) Moreover,

to seek a final adjudication of no case law affording

of such claim judicial

of such judicial

with any suggestion

of deference. deference

533 U.S. at 232-33. interpretations

we are aware

by SIPC.

4 SIPA 78eee(5)(C)( "Recommendation of SIPC and awarding of allowances") has been interpreted to require some judicial deference to SIPC on the limited issue of compensation for services rendered by a trustee and his attorney in the liquidation of an estate. See. In re Lloyd Securities, Inc., 163 B.R. 242.

HELLER, Page 9





It is anticipated and its resulting absence context; institution according viewed guardian while trustee controls SIPA have "expertise."

that SIPC will call attention Mere expertise, Moreover, within to the public of interest pursuant claims. SIPA liquidation SIPA however, the statutory interests in SIPA

to its institutional

experience deference


the Act

is not a basis scheme

for judicial

in the in as an than be

of Congressional SIPC has discrete are by no means

delegation. functions identical conflict

such expertise

and experience and its interests claims,

must be viewed and objectives Rather should

to be advanced itself, between

by the Act. SIPC positions

to SIPC any deference in light of the inherent of the SIPC and evaluation appointed

as to its positions

on customer

the role of SIPC as the to understand the SIPC effectively that the provisions In re First State and SIPC has of that

Fund (established of customer in a SIPA

to SIPA 78ddd(a)) In this connection, is nominally 78eee(b)(3), Indeed, (6).

and the role of SIPC in the it is important In addition, (noting observed by SIPC." SIPC may name


the trustee


and may even name the trustee's for Trustee's Corp., awaited have the effect acted at all times

itself as trustee.

compensation. attorneys' of"assuring in unison approval


See JA-746

that SIPC has advanced

$2 million Securities routinely

fees in this case.) [the Trustee's] S.D.FIa. taking with no discemable before the inherent as early

it has been and control

domination 1984). disparities conflict

39 B.R. 26, 27 (Bankr. SIPC's

In this proceeding, as to position Thus, of interest

the Trustee

and the Trustee

any positionJ

the nominal in having conflict history

"disinterestedness" SIPC play a role in the of the of the 1978

of the Trustee determination claims amendments concerned pressing any claims on Securities 8331 "SIPC exists judicial (April under

does nothing of claims process

to meliorate was observed

to be paid from the SIPA that "[SIPC] of customer which would on Banking, Furthermore,


This inherent

and its impact shown


as 1978. The legislative has, during There is a built-in and SIPC, and Urban before its liability." conflict

finds the observation with protecting for recognition upon principles 173.

its brief existence, except Affairs,

itself to be highly with the trustee of cases, Senate, testified of interest or policy in claim of resisting on H.R. that is the Subcommittee

the SIPC trust fund.

of interest Before States

strongly based

claims expand Housing

in the clearest Hearings United

of the Committee 25, 1978), the present


witness While

the Senate

Committee conflict

has perverted

the Act by dominating SIPC Act."

the trustee"

and that "an irresolvable to the extent by a misapplication

of interest

[d. at 134-135. made

that the conflict of a doctrine trustees

built into SIPA, deference determination

this conflict to the claim proceedings. In short,

must not be exacerbated determinations

by the SIPC dominated

this Court



with extreme within


the claim

of either

the Trustee its

or SIPC that they are only concerned

with acting

the strictures

of the Act and that the SEC,

5 It also should construction questions Gretchin, 2000, of its ability as to whether "Many Holes

be noted

that SIPC

has been


criticized theft

for taking

the narrowest

possible serious Morgenson, 25,

to compensate SIPC (with


of brokerage fund)


and misappropriation, from its mandate.

raising See.

a billion


is completely of Failed





Net for Victims


The New

York Times,


at A-1.

HE.LLER, Page 10


_. FEW,



oversight having Supreme apply

agency, for whatever Court

somehow reasons

has misunderstood chosen should to oppose accord



and provisions nonetheless,

oft.he under


In view of SIPC,

the statutory


we submit

that the SIPC should substantial

have deferred deference Series

here to the SEC Positions.

the SEC, the Court

the applicable or alternatively, on appeal.


to the SEC Positions, 500 Rules to the issue

the plain language

of the SEC's

duly promulgated Respectfully


Sigtrfund cc: All Counsel (via fax)

S. Wissner-Gross