I 

112TH CONGRESS 

2D SESSION H. R. 4002 

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 9, 2012 

Mr. CASSIDY (for himself, Mr. DEUTCH, Mr. HARPER, Mr. DUNCAN of Tennessee, Mr. ALEXANDER, Mr. WEST, Mr. BOUSTANY, Mr. CULBERSON, 

Mr. MCCAUL, Mr. LANDRY, Mr. SESSIONS, Mr. GRIFFIN of Arkansas, 

and Mr. HASTINGS of Florida) 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 Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Improving Security 

5 for Investors and Providing Closure Act of 2012’’ or the 

6 ‘‘Improving SIPC Act of 2012’’. 


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1 SEC. 2. CUSTOMER PAYMENT DURING PENDING ACTION. 

2 (a) IN GENERAL.—Section 11 of the Securities Inves3 tor Protection Act of 1970 (15 U.S.C. 78ggg) is amend4 ed— 

5 (1) by redesignating subsections (c) and (d) as 

6 subsections (d) and (e), respectively; and 

7 (2) by inserting after subsection (b) the fol8 lowing: 

9 ‘‘(c) CUSTOMER PAYMENT DURING PENDING AC10 TION.— 

11 ‘‘(1) ONE-TIME PAYMENT PERMITTED.— 

12 ‘‘(A) IN GENERAL.—At the time that an 

13 action is initiated under subsection (b), SIPC 

14 may choose to allow all customers of the debtor 

15 to elect to receive a one-time payment from the 

16 SIPC Fund to settle their net equity claims 

17 against the debtor. 

18 ‘‘(B) CUSTOMER ELECTION.—If SIPC al19 lows customers to make the election described 

20 under subparagraph (A), each customer choos21 ing to make such election— 

22 ‘‘(i) must make such election during 

23 the action brought under subsection (b), 

24 but in no case later than the 180-day pe25 riod beginning on the date that SIPC 

26 chooses to allow such election; and 


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1 ‘‘(ii) shall forgo all other possible pro2 tections under this Act with respect to the 

3 debtor. 

4 ‘‘(2) METHOD OF PAYMENT.— 

5 ‘‘(A) IN GENERAL.—To the extent prac6 ticable, one-time payments made under this 

7 subsection shall be made in the same manner as 

8 payments of net equity claims of customers of 

9 a debtor are made under the other provisions of 

10 this Act. 

11 ‘‘(B) PAYMENT AMOUNT LIMITED TO

12 CLAIMS.—The amount paid to a customer 

13 under this subsection may not exceed the cus14 tomer’s net equity claims against the debtor. 

15 ‘‘(3) CAP ON ONE-TIME PAYMENTS.—At the 

16 time the action is initiated under subsection (b), 

17 SIPC shall set a cap on the amount of one-time pay18 ments that can be made under this subsection, and 

19 such cap— 

20 ‘‘(A) shall not exceed $500,000; and 

21 ‘‘(B) shall apply equally to all customers of 

22 the debtor. 

23 ‘‘(4) EFFECT OF ELECTION.—With respect to 

24 any customer who receives a one-time payment 

25 under this subsection, SIPC shall be subrogated to 


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1 all rights of the customer against the debtor, regard2 less of whether the one-time payment was in an 

3 amount to fully satisfy the customer’s claims against 

4 the debtor. 

5 ‘‘(5) NOTICE; TECHNICAL ASSISTANCE.—If 

6 SIPC allows customers to make the election de7 scribed under paragraph (1)(A), SIPC shall— 

8 ‘‘(A) promptly notify each customer of the 

9 debtor of their rights under this subsection; and 

10 ‘‘(B) provide technical assistance to such 

11 customers to determine if they should make an 

12 election under paragraph (1)(B). 

13 ‘‘(6) TREATMENT OF CERTIFICATES OF DE14 POSIT.—For purposes of this subsection, a certifi15 cate of deposit purchased by a person through an 

16 account with the debtor shall be treated as cash de17 posited and held by the debtor in an amount equal 

18 to the amount the person paid for the certificate of 

19 deposit, less any amounts paid to such person on the 

20 certificate of deposit. 

21 ‘‘(7) RULEMAKING.—SIPC may issue such reg22 ulations as may be necessary to carry out this sub23 section. 

24 ‘‘(8) DEBTOR DEFINED.—For purposes of this 

25 subsection, the term ‘debtor’ means the broker or 


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1 dealer that is the subject of the action brought 

2 under subsection (b).’’. 

3 (b) APPLICATION.—With respect to an ongoing ac4 tion brought under section 11(b) of the Securities Investor 

5 Protection Act of 1970 (15 U.S.C. 78ggg(b)) before the 

6 date of the enactment of this Act, the customer election 

7 available under section 11(c) of such Act may be made 

8 during the 180-day period beginning on the date of the 

9 enactment of this Act. 

Æ 


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