15 U.S.C. § 78eee — Protection of customers

Page 484 TITLE 15—COMMERCE AND TRADE § 78eee 1 So in original. Probably should be ‘‘(i)’’. 2 So in original. Probably should be ‘‘(ii)’’. Stat. 1067, the first section of which enacted Title 31, Money and Finance. AMENDMENTS 2010—Subsec. (d)(1)(C). Pub. L. 111–203, § 929V(a), sub- stituted ‘‘0.02 percent of the gross revenues from the se- curities business of such member of SIPC’’ for ‘‘$150 per annum’’. Subsec. (h). Pub. L. 111–203, § 929C, substituted ‘‘$2,500,000,000’’ for ‘‘$1,000,000,000’’ in first sentence. 1978—Subsec. (a). Pub. L. 95–283, § 6(a), in par. (2) sub- stituted ‘‘Except as otherwise provided in this section, the’’ for ‘‘The’’, in par. (2)(C) inserted provisions for in- applicability to other lines of credit, and added par. (4). Subsec. (c). Pub. L. 95–283, § 6(b), in par. (2) struck out ‘‘or rule’’ after ‘‘bylaw’’, and in par. (3) struck out ref- erence to section 78ccc(f) of this title in introductory text and ‘‘or rule’’ after ‘‘bylaw’’ in subpar. (B). Subsec. (d)(1)(C). Pub. L. 95–283, § 6(c), added subpar. (C). Subsec. (e). Pub. L. 95–283, § 6(d), in par. (2) sub- stituted ‘‘be recoverable only against future payments by such member, except as otherwise provided by SIPC bylaw’’ for ‘‘not be recoverable except against future payments by such member in accordance with a bylaw or rule of SIPC’’, and in par. (3) substituted provisions authorizing interest and penalty charges to be imposed by SIPC bylaw and amount of penalty charge, for provi- sions authorizing interest to be imposed by SIPC bylaw or rule. Subsec. (f). Pub. L. 95–283, § 6(e), struck out ‘‘exam- ining authority as’’ before ‘‘collection agent for SIPC, shall immediately be subject’’. Subsec. (g). Pub. L. 95–283, § 6(f), redesignated cls. (A) to (C) as (1) to (3), respectively, and, as so redesignated, in cl. (2) struck out applicability to a member of a na- tional securities exchange and in cl. (3) substituted pro- visions relating to exemptions by rule of transactions in the over-the-counter market or on any national se- curities exchange, for provisions relating to exemp- tions by rules and regulations of transactions in the over-the-counter market, and inserted provisions au- thorizing the collection of fees by such other persons as designated by the Commission by rule for such purpose, and provisions relating to limits on manner of payment of fees. Subsec. (i). Pub. L. 95–283, § 6(g), substituted ‘‘Consoli- dated group’’ for ‘‘ ‘Gross revenues’ defined’’ in heading, redesignated par. (2) as entire section and, as so redes- ignated, substituted provisions relating to computa- tions by a member, for provisions relating to computa- tions by a broker or dealer. Pars. (1) and (3), which gen- erally defined term ‘‘gross revenues’’ and authorized the SIPC to define all other terms used in this subsec., respectively, were struck out. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT 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. § 78eee. Protection of customers (a) Determination of need of protection (1) Notice to SIPC If the Commission or any self-regulatory or- ganization is aware of facts which lead it to believe that any broker or dealer subject to its regulation is in or is approaching financial dif- ficulty, it shall immediately notify SIPC, and, if such notification is by a self-regulatory or- ganization, the Commission. (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 re- duce its business either pursuant to the direc- tion of a self-regulatory organization or volun- tarily, 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 (A) In general SIPC may, upon notice to a member of SIPC, file an application for a protective de- cree with any court of competent jurisdic- tion 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 pur- suant to section 78fff–3 of this title, if SIPC determines that— (A) 1 the member (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) 2 one or more of the conditions speci- fied in subsection (b)(1) exist with respect to such member. (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 Con- sumer Protection Act [12 U.S.C. 5381 et seq.]. (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 Commis- sion, 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 pend- ency 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 mem- ber or its property, or any proceeding to en- force a lien against property of such mem- ber. (b) Court action (1) Issuance of protective decree Upon receipt of an application by SIPC under subsection (a)(3), the court shall forth- Page 485 TITLE 15—COMMERCE AND TRADE § 78eee with 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 sec- tion 101 of title 11, or is unable to meet its obligations as they mature; (B) is the subject of a proceeding pending in any court or before any agency of the United States or any State in which a re- ceiver, trustee, or liquidator for such debtor has been appointed; (C) is not in compliance with applicable re- quirements under the 1934 Act [15 U.S.C. 78a et seq.] or rules of the Commission or any self-regulatory organization with respect to financial responsibility or hypothecation of customers’ securities; or (D) 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 consider- ation the urgency which the circumstances re- quire. (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 lo- cated (including property located outside the territorial limits of such court and property held by any other person as secu- rity 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 pro- visions of this chapter, shall have the ju- risdiction, powers, and duties conferred upon a court of the United States having jurisdiction over cases under title 11, to- gether with such other jurisdiction, pow- ers, and duties as are prescribed by this chapter. (B) Stay of pending actions Pending the issuance of a protective de- cree 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, con- serve, or liquidate the debtor or its prop- erty and any other suit against any re- ceiver, conservator, or trustee of the debt- or or its property, and shall continue such stay upon appointment of a trustee pursu- ant 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, offi- cers, 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 para- graph (3), may continue the stay for such period of time as may be appropriate, but shall not abrogate any right of setoff, ex- cept to the extent such right may be af- fected under section 553 of title 11, and shall not abrogate the right to enforce a valid, nonpreferential lien or pledge against the property of the debtor; and (iv) may appoint a temporary receiver. (C) Exception from stay (i) Notwithstanding section 362 of title 11, neither the filing of an application under subsection (a)(3) nor any order or decree ob- tained by SIPC from the court shall operate as a stay of any contractual rights of a cred- itor to liquidate, terminate, or accelerate a securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, or master netting agree- ment, as those terms are defined in sections 101, 741, and 761 of title 11, to offset or net termination values, payment amounts, or other transfer obligations arising under or in connection with one or more of such con- tracts or agreements, or to foreclose on any cash collateral pledged by the debtor, wheth- er or not with respect to one or more of such contracts or agreements. (ii) Notwithstanding clause (i), such appli- cation, 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 agree- ment, 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 derivatives clearing organization (as defined in the Com- modity Exchange Act [7 U.S.C. 1 et seq.]), a multilateral clearing organization (as de- fined in the Federal Deposit Insurance Cor- poration Improvement Act of 1991), a na- tional securities exchange, a national securi- ties association, a securities clearing agen- cy, 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), or in a resolution of the gov- erning board thereof, and a right, whether or not in writing, arising under common law, under law merchant, or by reason of normal business practice. (3) Appointment of trustee and attorney If the court issues a protective decree under paragraph (1), such court shall forthwith ap- point, as trustee for the liquidation of the business of the debtor and as attorney for the trustee, such persons as SIPC, in its sole dis- cretion, specifies. The persons appointed as Page 486 TITLE 15—COMMERCE AND TRADE § 78eee 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 trust- ee or attorney for the trustee if such person is not disinterested within the meaning of para- graph (6), except that for any specified purpose other than to represent a trustee in con- ducting 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 pre- scribed 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. (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 liq- uidation proceeding to the court of the United States in the same judicial district having ju- risdiction over cases under title 11. The latter court shall thereupon have all of the jurisdic- tion, powers, and duties conferred by this chapter upon the court to which application for the issuance of the protective decree was made. (5) Compensation for services and reimburse- ment of expenses (A) Allowances in general The court shall grant reasonable com- pensation for services rendered and reim- bursement for proper costs and expenses in- curred (hereinafter in this paragraph re- ferred to as ‘‘allowances’’) by a trustee, and by the attorney for such a trustee, in con- nection with a liquidation proceeding. No al- lowances (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 grant- ed on an interim basis during the course of the liquidation proceeding at such times and in such amounts as the court considers ap- propriate. (B) Application for allowances Any person seeking allowances shall file with the court an application which com- plies in form and content with the provisions of title 11 governing applications for allow- ances under such title. A copy of such appli- cation 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 cus- tomers whose claims have been or will be satisfied in full or to creditors who cannot reasonably be expected to receive any dis- tribution during the course of the liquida- tion proceeding. (C) Recommendations of SIPC and awarding of allowances 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 fur- ther recommendation. In any case in which such allowances are to be paid by SIPC with- out reasonable expectation of recoupment thereof as provided in this chapter and there is no difference between the amounts re- quested 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 na- ture, extent, and value of the services ren- dered, and shall place considerable reliance on the recommendation of SIPC. (D) Applicable restrictions The restrictions on sharing of compensa- tion set forth in section 504 of title 11 shall apply to allowances. (E) 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 es- tate 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 fil- ing date was the underwriter of any securi- ties 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 appears that such person has, by reason of any other direct or indirect rela- tionship 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 stock- holders, 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. Page 487 TITLE 15—COMMERCE AND TRADE § 78eee (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 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 adjourn- ment thereof, or upon application, the court shall hear objections to the retention in of- fice of a trustee or attorney for a trustee on the grounds that such person is not disin- terested. (c) SEC participation in proceedings 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. (d) SIPC participation SIPC shall be deemed to be a party in interest as to all matters arising in a liquidation pro- ceeding, 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. (Pub. L. 91–598, § 5, Dec. 30, 1970, 84 Stat. 1644; Pub. L. 95–283, § 7, May 21, 1978, 92 Stat. 254; Pub. L. 95–598, title III, § 308(a)–(f), Nov. 6, 1978, 92 Stat. 2674; Pub. L. 109–8, title IX, § 911, Apr. 20, 2005, 119 Stat. 185; Pub. L. 109–390, § 5(c), Dec. 12, 2006, 120 Stat. 2698; Pub. L. 111–203, title IX, § 929H(b), July 21, 2010, 124 Stat. 1857.) Editorial Notes REFERENCES IN TEXT The Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to in subsec. (a)(3)(B), is Pub. L. 111–203, July 21, 2010, 124 Stat. 1376. Title II of the Act is classified principally to subchapter II (§ 5381 et seq.) of chapter 53 of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of Title 12 and Tables. The 1934 Act, referred to in subsec. (b)(1)(C), means act June 6, 1934, ch. 404, 48 Stat. 881, known as the Secu- rities Exchange Act of 1934, which is classified prin- cipally to chapter 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see sec- tion 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, Dec. 30, 1970, 84 Stat. 1636. For complete classification of this Act to the Code, see Tables. 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 Improve- ment Act of 1991, referred to in subsec. (b)(2)(C)(iii), is Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2236. For com- plete classification of this Act to the Code, see Short Title of 1991 Amendment note set out under section 1811 of Title 12, Banks and Banking, and Tables. AMENDMENTS 2010—Subsec. (a)(3). Pub. L. 111–203 designated exist- ing 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 protec- tive 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 deter- mines that—’’ for ‘‘If SIPC determines that—’’, in sub- par. (A) relating to failure to meet obligations, sub- stituted ‘‘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 applica- tion 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 or- ganization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991),’’ after ‘‘rule or bylaw of’’ and substituted ‘‘a securities clearing agen- cy, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution fa- cility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Ex- change 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 redesig- nated, revised format of provisions by setting out cls. (A) and (B) and inserted provisions relating to any per- son who was a member within 180 days prior to such de- termination and provisions relating to claims filed under section 78fff–3 of this title, and redesignated former par. (3) as (4) and, as so redesignated, sub- stituted ‘‘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), sub- stituted ‘‘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 mean- ing of Bankruptcy Act, was struck out. Subsec. (b)(2)(A)(iii). Pub. L. 95–598, § 308(b), sub- stituted ‘‘the United States having jurisdiction over cases under title 11’’ for ‘‘bankruptcy by the Bank- ruptcy Act’’. Subsec. (b)(2)(B)(iii). Pub. L. 95–598, § 308(c), sub- stituted ‘‘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 pro- visions relating to removal of proceeding to Bank- ruptcy Court for provisions relating to reference of pro- ceeding to referee in bankruptcy. Page 488 TITLE 15—COMMERCE AND TRADE § 78fff Subsec. (b)(5)(B). Pub. L. 95–598, § 308(f)(1), (2), (5), re- designated subpar. (C) as (B) and substituted ‘‘title 11 governing applications for allowances under such title’’ for ‘‘the Bankruptcy Act governing applications for al- lowances under such Act’’. Former subpar. (B), which covered allowances to a referee in bankruptcy or spe- cial master, was struck out. Subsec. (b)(5)(C). Pub. L. 95–598, § 308(f)(2), (3), (5), re- designated subpar. (D) as (C) and substituted ‘‘subpara- graph (B)’’ for ‘‘subparagraph (C)’’. Former subpar. (C) redesignated (B). Subsec. (b)(5)(D). Pub. L. 95–598, § 308(f)(2), (4), (5), re- designated subpar. (E) as (D) and substituted ‘‘Section 504 of title 11’’ for ‘‘the Bankruptcy Act’’. Former sub- par. (D) redesignated (C). Subsec. (b)(5)(E), (F). Pub. L. 95–598, § 308(f)(5), redes- ignated subpar. (F) as (E). Former subpar. (E) redesig- nated (D). Subsec. (b). Pub. L. 95–283, § 7(b), in par. (1) inserted ‘‘protective’’ after ‘‘of’’ in heading and substituted pro- visions 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 head- ing and substituted provisions setting forth jurisdic- tion 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 at- torney, for provisions relating to appointment of trust- ee, in par. (4) substituted ‘‘Reference to referee in bank- ruptcy’’ for ‘‘Debtor and filing date defined’’ in heading and substituted provisions relating to reference to ref- eree 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). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT 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. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–390 not applicable to any cases commenced under Title 11, Bankruptcy, or to ap- pointments made under any Federal or State law, be- fore Dec. 12, 2006, see section 7 of Pub. L. 109–390, set out as a note under section 101 of Title 11. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under Title 11, Bankruptcy, before such ef- fective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of Title 11. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598, set out as an Effec- tive Date note preceding section 101 of Title 11, Bank- ruptcy. § 78fff. General provisions of a liquidation pro- ceeding (a) Purposes The purposes of a liquidation proceeding under this chapter shall be— (1) as promptly as possible after the appoint- ment of a trustee in such liquidation pro- ceeding, and in accordance with the provisions of this chapter— (A) to deliver customer name securities to or on behalf of the customers of the debtor entitled thereto as provided in section 78fff–2(c)(2) of this title; and (B) to distribute customer property and (in advance thereof or concurrently therewith) otherwise satisfy net equity claims of cus- tomers to the extent provided in this sec- tion; (2) to sell or transfer offices and other pro- ductive units of the business of the debtor; (3) to enforce rights of subrogation as pro- vided in this chapter; and (4) to liquidate the business of the debtor. (b) Application of title 11 To the extent consistent with the provisions of this chapter, a liquidation proceeding shall be conducted in accordance with, and as though it were being conducted under chapters 1, 3, and 5 and subchapters I and II of chapter 7 of title 11. For the purposes of applying such title in car- rying out this section, a reference in such title to the date of the filing of the petition shall be deemed to be a reference to the filing date under this chapter. (c) Determination of customer status In a liquidation proceeding under this chapter, whenever a person has acted with respect to cash or securities with the debtor after the fil- ing date and in a manner which would have given him the status of a customer with respect to such cash or securities had the action oc- curred prior to the filing date, and the trustee is satisfied that such action was taken by the cus- tomer in good faith and prior to the appoint- ment of the trustee, the date on which such ac- tion was taken shall be deemed to be the filing date for purposes of determining the net equity of such customer with respect to such cash or securities. (d) Apportionment In a liquidation proceeding under this chapter, any cash or securities remaining after the liq- uidation of a lien or pledge made by a debtor shall be apportioned between his general estate and customer property in the proportion in which the general property of the debtor and the cash and securities of the customers of such debtor contributed to such lien or pledge. Secu- rities apportioned to the general estate under this subsection shall be subject to the provisions of section 78lll(5)(A) of this title. (e) Costs and expenses of administration All costs and expenses of administration of the estate of the debtor and of the liquidation pro- ceeding shall be borne by the general estate of the debtor to the extent it is sufficient therefor, and the priorities of distribution from the gen- eral estate shall be as provided in section 726 of title 11. Costs and expenses of administration shall include payments pursuant to section 78fff–2(e) of this title and section 78fff–3(c)(1) of this title (to the extent such payments recov- ered securities which were apportioned to the general estate pursuant to subsection (d)) and costs and expenses of SIPC employees utilized by the trustee pursuant to section 78fff–1(a)(2) of this title. All funds advanced by SIPC to a trust-