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 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 2013’’ or the 

6 ‘‘Improving SIPC Act of 2013’’. 


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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. 

17 ‘‘(B) CUSTOMER ELECTION.—If SIPC al18 lows customers to make the election described 

19 under subparagraph (A), each customer choos20 ing to make such election must make such elec21 tion during the action brought under subsection 

22 (b), but in no case later than the 180-day pe23 riod beginning on the date that SIPC chooses 

24 to allow such election. 

25 ‘‘(2) METHOD OF PAYMENT.— 


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1 ‘‘(A) IN GENERAL.—To the extent prac2 ticable, one-time payments made under this 

3 subsection shall be made in the same manner as 

4 payments of net equity claims of customers of 

5 a debtor are made under the other provisions of 

6 this Act. 

7 ‘‘(B) PAYMENT AMOUNT LIMITED TO

8 CLAIMS.—The amount paid to a customer 

9 under this subsection shall be equal to the less10 er of— 

11 ‘‘(i) the customer’s net equity claim 

12 against the debtor; and 

13 ‘‘(ii) the cap set under paragraph (3). 

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

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

16 SIPC shall set a cap on the amount of one-time pay17 ments that can be made under this subsection, and 

18 such cap— 

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

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

21 the debtor. 

22 ‘‘(4) EFFECT OF ELECTION.— 

23 ‘‘(A) NO SIPC ADVANCE.—Section 9(a) 

24 shall not apply with respect to any customer 


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1 who receives a one-time payment under this 

2 subsection. 

3 ‘‘(B) SUBROGATION.—With respect to any 

4 customer who receives a one-time payment 

5 under this subsection, SIPC shall be subrogated 

6 to all rights of such customer against the debt7 or once the customer recovers an amount equal 

8 to the customer’s net equity claim against the 

9 debtor. 

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

11 SIPC allows customers to make the election de12 scribed under paragraph (1)(A), SIPC shall— 

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

14 debtor of their rights under this subsection; and 

15 ‘‘(B) provide technical assistance to such 

16 customers to determine if they should make an 

17 election under paragraph (1)(B). 

18 ‘‘(6) TREATMENT OF CERTIFICATES OF DE19 POSIT.—For purposes of this subsection, a certifi20 cate of deposit purchased by a person through an 

21 account with the debtor shall be treated as cash de22 posited and held by the debtor in an amount equal 

23 to the amount the person paid for the certificate of 

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

25 certificate of deposit. 


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1 ‘‘(7) JUDICIAL REVIEW OF CERTAIN SIPC DE2 TERMINATIONS.—With respect to any person who is 

3 not permitted to make an election under this sub4 section because SIPC does not identify them as a 

5 customer of the debtor, such person may commence 

6 an action against SIPC in the appropriate United 

7 States district court to challenge the determination 

8 by SIPC that they are not a customer of the debtor. 

9 ‘‘(8) RULEMAKING.—SIPC may issue such reg10 ulations as may be necessary to carry out this sub11 section. 

12 ‘‘(9) DEBTOR DEFINED.—For purposes of this 

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

14 dealer that is the subject of the action brought 

15 under subsection (b).’’. 

16 (b) APPLICATION.—With respect to an ongoing ac17 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 (c) RULE OF CONSTRUCTION.—A person’s qualifica24 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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1 effect on whether such person qualifies as a customer 

2 under any other provision of such Act. 

Æ 


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