15 U.S.C. § 78kkk — Miscellaneous provisions

Page 499 TITLE 15—COMMERCE AND TRADE § 78kkk claims’’ for ‘‘Embezzlement, etc., of assets of SIPC’’, added par. (1), and designated existing provisions as par. (2) and, as so designated, inserted references to di- rect or indirect acts, and provisions covering defraud- ing or attempts to defraud SIPC or a trustee, and sub- stituted provisions covering activities constituting fraudulent, or with intent to defeat this chapter, ab- stracts or conversions, for provisions covering activi- ties constituting unlawfully abstracting or unlawfully and willfully converting moneys, etc. 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. § 78kkk. Miscellaneous provisions (a) Public inspection of reports Any notice, report, or other document filed with SIPC pursuant to this chapter shall be available for public inspection unless SIPC or the Commission shall determine that disclosure thereof is not in the public interest. Nothing herein shall act to deny documents or informa- tion to the Congress of the United States or the committees of either House having jurisdiction over financial institutions, securities regula- tion, or related matters under the rules of each body. Nor shall the Commission be denied any document or information which the Commis- sion, in its judgment, needs. (b) Liability of members of SIPC Except for such assessments as may be made upon such member pursuant to the provisions of section 78ddd of this title, no member of SIPC shall have any liability under this chapter as a member of SIPC for, or in connection with, any act or omission of any other broker or dealer whether in connection with the conduct of the business or affairs of such broker or dealer or otherwise and, without limiting the generality of the foregoing, no member shall have any li- ability for or in respect of any indebtedness or other liability of SIPC. (c) Liability of SIPC and Directors, officers, or employees Neither SIPC nor any of its Directors, officers, or employees shall have any liability to any per- son for any action taken or omitted in good faith under or in connection with any matter contemplated by this chapter. (d) Advertising SIPC shall by bylaw prescribe the manner in which a member of SIPC may display any sign or signs (or include in any advertisement a statement) relating to the protection to cus- tomers and their accounts, or any other protec- tions, afforded under this chapter. No member may display any such sign, or include in an ad- vertisement any such statement, except in ac- cordance with such bylaws. SIPC may also by bylaw prescribe such minimal requirements as it considers necessary and appropriate to require a member of SIPC to provide public notice of its membership in SIPC. (e) SIPC exempt from taxation SIPC, its property, its franchise, capital, re- serves, surplus, and its income, shall be exempt from all taxation now or hereafter imposed by the United States or by any State or local tax- ing authority, except that any real property and any tangible personal property (other than cash and securities) of SIPC shall be subject to State and local taxation to the same extent according to its value as other real and tangible personal property is taxed. Assessments made upon a member of SIPC shall constitute ordinary and necessary expenses in carrying on the business of such member for the purpose of section 162(a) of title 26. The contribution and transfer to SIPC of funds or securities held by any trust es- tablished by a national securities exchange prior to January 1, 1970, for the purpose of providing assistance to customers of members of such ex- change, shall not result in any taxable gain to such trust or give rise to any taxable income to any member of SIPC under any provision of title 26, nor shall such contribution or transfer, or any reduction in assessments made pursuant to this chapter, in any way affect the status, as or- dinary and necessary expenses under section 162(a) of title 26, of any contributions made to such trust by such exchange at any time prior to such transfer. Upon dissolution of SIPC, none of its net assets shall inure to the benefit of any of its members. (f) Section 78t(a) of this title not to apply The provisions of subsection (a) of section 78t of this title shall not apply to any liability under or in connection with this chapter. (g) SEC study of unsafe or unsound practices Not later than twelve months after December 30, 1970, the Commission shall compile a list of unsafe or unsound practices by members of SIPC in conducting their business and report to the Congress (1) the steps being taken under the au- thority of existing law to eliminate those prac- tices and (2) recommendations concerning addi- tional legislation which may be needed to elimi- nate those unsafe or unsound practices. (Pub. L. 91–598, § 15, formerly § 11, Dec. 30, 1970, 84 Stat. 1655; renumbered § 15 and amended Pub. L. 95–283, §§ 9, 14, May 21, 1978, 92 Stat. 260, 270; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a) to (f), 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. AMENDMENTS 1986—Subsec. (e). Pub. L. 99–514 substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’ wherever appearing, which for purposes of codi- fication was translated as ‘‘title 26’’ thus requiring no change in text. 1978—Subsec. (b). Pub. L. 95–283, § 14(c), redesignated subsec. (c) as (b). Former subsec. (b), relating to appli- cation of securities investor protection provisions to foreign members, was struck out. Subsec. (c). Pub. L. 95–283, § 14(a), (c), redesignated subsec. (d) as (c) and inserted ‘‘, officers, or employees’’ after ‘‘Directors’’ in heading and text. Former subsec. (c) redesignated (b). Subsec. (d). Pub. L. 95–283, § 14(b), (c), redesignated subsec. (e) as (d), inserted provisions authorizing SIPC Page 500 TITLE 15—COMMERCE AND TRADE § 78lll to prescribe necessary and proper minimal require- ments for providing public notice of membership by a member of SIPC in SIPC, and struck out provisions au- thorizing rules by SIPC to implement advertising re- quirements. Former subsec. (d) redesignated (c). Subsecs. (e) to (h). Pub. L. 95–283, § 14(c), redesignated subsecs. (e) to (h) as (d) to (g), respectively. § 78lll. Definitions For purposes of this chapter, including the ap- plication of the Bankruptcy Act to a liquidation proceeding: (1) Commission The term ‘‘Commission’’ means the Securi- ties and Exchange Commission. (2) Customer (A) In general The term ‘‘customer’’ of a debtor means any person (including any person with whom the debtor deals as principal or agent) who has a claim on account of securities re- ceived, acquired, or held by the debtor in the ordinary course of its business as a broker or dealer from or for the securities accounts of such person for safekeeping, with a view to sale, to cover consummated sales, pursuant to purchases, as collateral, security, or for purposes of effecting transfer. (B) Included persons The term ‘‘customer’’ includes— (i) any person who has deposited cash with the debtor for the purpose of pur- chasing securities; (ii) any person who has a claim against the debtor for cash, securities, futures con- tracts, or options on futures contracts re- ceived, acquired, or held in a portfolio margining account carried as a securities account pursuant to a portfolio margining program approved by the Commission; and (iii) any person who has a claim against the debtor arising out of sales or conver- sions of such securities. (C) Excluded persons The term ‘‘customer’’ does not include any person, to the extent that— (i) the claim of such person arises out of transactions with a foreign subsidiary of a member of SIPC; or (ii) such person has a claim for cash or securities which by contract, agreement, or understanding, or by operation of law, is part of the capital of the debtor, or is subordinated to the claims of any or all creditors of the debtor, notwithstanding that some ground exists for declaring such contract, agreement, or understanding void or voidable in a suit between the claimant and the debtor. (3) Customer name securities The term ‘‘customer name securities’’ means securities which were held for the account of a customer on the filing date by or on behalf of the debtor and which on the filing date were registered in the name of the customer, or were in the process of being so registered pur- suant to instructions from the debtor, but does not include securities registered in the name of the customer which, by endorsement or otherwise, were in negotiable form. (4) Customer property The term ‘‘customer property’’ means cash and securities (except customer name securi- ties delivered to the customer) at any time re- ceived, acquired, or held by or for the account of a debtor from or for the securities accounts of a customer, and the proceeds of any such property transferred by the debtor, including property unlawfully converted. The term ‘‘cus- tomer property’’ includes— (A) securities held as property of the debt- or to the extent that the inability of the debtor to meet its obligations to customers for their net equity claims based on securi- ties of the same class and series of an issuer is attributable to the debtor’s noncompli- ance with the requirements of section 78o(c)(3) of this title and the rules prescribed under such section; (B) resources provided through the use or realization of customers’ debit cash balances and other customer-related debit items as defined by the Commission by rule; (C) any cash or securities apportioned to customer property pursuant to section 78fff(d) of this title; (D) in the case of a portfolio margining ac- count of a customer that is carried as a secu- rities account pursuant to a portfolio mar- gining program approved by the Commis- sion, a futures contract or an option on a fu- tures contract received, acquired, or held by or for the account of a debtor from or for such portfolio margining account, and the proceeds thereof; and (E) any other property of the debtor which, upon compliance with applicable laws, rules, and regulations, would have been set aside or held for the benefit of customers, unless the trustee determines that including such property within the meaning of such term would not significantly increase customer property. (5) Debtor The term ‘‘debtor’’ means a member of SIPC with respect to whom an application for a pro- tective decree has been filed under section 78eee(a)(3) of this title or a direct payment procedure has been instituted under section 78fff–4(b) of this title. (6) Examining authority The term ‘‘examining authority’’ means, with respect to any member of SIPC (A) the self-regulatory organization which inspects or examines such member of SIPC, or (B) the Commission if such member of SIPC is not a member of or participant in any self-regu- latory organization or if the Commission has designated itself examining authority for such member pursuant to section 78iii(c) of this title. (7) Filing date The term ‘‘filing date’’ means the date on which an application for a protective decree is filed under section 78eee(a)(3) of this title, ex- cept that—