I 

111TH CONGRESS 

1ST SESSION H. R. 2798 

To increase securities protection coverage in the event of stolen or missing 

assets, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 10, 2009 

Mr. ARCURI (for himself and Mr. MAFFEI) introduced the following bill; which 

was referred to the Committee on Financial Services 

A BILL 

To increase securities protection coverage in the event of 

stolen or missing assets, 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 ‘‘Support Investment 

5 Protection for Customers Reform Act of 2009’’. 

6 SEC. 2. INCREASING SECURITIES INVESTOR PROTECTION 

7 CORPORATION CASH COVERAGE. 

8 (a) INCREASING THE CASH LIMIT OF PROTECTION

9 FROM $100,000 TO $250,000.—Section 9 of the SecuriVerDate Nov 24 2008 05:58 Jun 11, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2798.IH H2798

tjames on PRODPC75 with BILLS
2 

•HR 2798 IH

1 ties Investor Protection Act (15 U.S.C. 78fff–3) is amend2 ed— 

3 (1) in subsection (a)(1), by striking ‘‘$100,000 

4 for each such customer’’ and inserting ‘‘the standard 

5 maximum cash advance amount for each such cus6 tomer, as determined in accordance with subsection 

7 (d)’’; and 

8 (2) by adding at the end the following new sub9 sections: 

10 ‘‘(d) STANDARD MAXIMUM CASH ADVANCE

11 AMOUNT.—For purposes of this Act, the term ‘standard 

12 maximum cash advance amount’ means $250,000, ad13 justed as provided under subsection (e) after March 31, 

14 2010. 

15 ‘‘(e) INFLATION ADJUSTMENT.— 

16 ‘‘(1) IN GENERAL.—Not later than April 1, 

17 2010, and the first day of each 5-year period there18 after, and subject to the approval of the Commis19 sion, the Board of Directors of SIPC shall consider 

20 the factors set forth under paragraph (5), and, upon 

21 determining that an inflation adjustment is appro22 priate, shall prescribe the amount by which the 

23 standard maximum cash advance amount applicable 

24 to a customer claim shall be increased by calculating 

25 the product of— 


tjames on PRODPC75 with BILLS
3 

•HR 2798 IH

1 ‘‘(A) $250,000; and 

2 ‘‘(B) the ratio of the annual value of the 

3 Personal Consumption Expenditures Chain4 Type Price Index (or any successor index there5 to), published by the Department of Commerce, 

6 for the calendar year preceding the year in 

7 which the adjustment is calculated under this 

8 paragraph, to the published annual value of 

9 such index for the calendar year preceding the 

10 date this subparagraph takes effect. The values 

11 used in such calculation shall be the applicable 

12 values most recently published by the Depart13 ment of Commerce. 

14 ‘‘(2) ROUNDING.—If the amount determined 

15 under paragraph (1) for any period is not a multiple 

16 of $10,000, the amount so determined shall be 

17 rounded down to the nearest $10,000. 

18 ‘‘(3) PUBLICATION AND REPORT TO CON19 GRESS.—Not later than April 5 of any calendar year 

20 in which an adjustment is required to be calculated 

21 under paragraph (1) to the standard maximum cash 

22 advance amount— 

23 ‘‘(A) the Commission shall publish in the 

24 Federal Register the standard maximum cash 

25 advance amount, as so calculated; and 


tjames on PRODPC75 with BILLS
4 

•HR 2798 IH

1 ‘‘(B) the Board of Directors of SIPC shall 

2 submit a report to the Congress containing the 

3 amount described in subparagraph (A). 

4 ‘‘(4) 6-MONTH IMPLEMENTATION PERIOD.—Any 

5 increase in the standard maximum cash advance 

6 amount shall take effect on January 1 of the year 

7 immediately succeeding the calendar year in which 

8 such increase is made. 

9 ‘‘(5) INFLATION ADJUSTMENT CONSIDER10 ATION.—In making any determination under para11 graph (1) to increase the standard maximum cash 

12 advance amount, the Board of Directors of SIPC 

13 shall consider, among other factors— 

14 ‘‘(A) the overall state of the fund; 

15 ‘‘(B) the economic conditions affecting 

16 members of SIPC; and 

17 ‘‘(C) potential problems affecting members 

18 of SIPC.’’. 

19 (b) INCREASING SIPC LINE OF CREDIT WITH THE

20 DEPARTMENT OF TREASURY.—Section 4(h) of the Securi21 ties Investor Protection Act (15 U.S.C. 78ddd(h)) is 

22 amended by striking out ‘‘$1,000,000,000’’ and inserting 

23 ‘‘the lesser of $2,500,000,000 or the target amount of the 

24 SIPC Fund specified in the bylaws of SIPC’’. 


tjames on PRODPC75 with BILLS
5 

•HR 2798 IH

1 SEC. 3. AMENDMENTS TO THE SECURITIES INVESTOR PRO2 TECTION ACT. 

3 (a) INCREASING THE MINIMUM ASSESSMENT PAID

4 BY SIPC MEMBERS.—Section 4(d)(1)(C) of the Securities 

5 Investor Protection Act (15 U.S.C. 78ddd(d)(1)(C)) is 

6 amended by striking ‘‘$150’’ and inserting ‘‘$1,000’’. 

7 (b) SIPC AS TRUSTEE IN SIPA LIQUIDATION PRO8 CEEDINGS.—Section 5(b)(3) of the Securities Investor 

9 Protection Act (15 U.S.C. 78eee(b)(3)) is amended— 

10 (1) by striking ‘‘SIPC has determined that the 

11 liabilities of the debtor to unsecured general credi12 tors and to subordinated lenders appear to aggre13 gate less than $750,000 and that’’; and 

14 (2) by striking ‘‘five hundred’’ and inserting 

15 ‘‘5,000’’. 

16 (c) INSIDERS INELIGIBLE FOR SIPC ADVANCE.— 

17 (1) IN GENERAL.—Section 9(a)(4) of the Secu18 rities Investor Protection Act (15 U.S.C. 78fff– 

19 3(a)(4)) is amended by inserting ‘‘an insider,’’ after 

20 ‘‘or net profits of the debtor,’’. 

21 (2) INSIDER DEFINED.—Section 16 of the Se22 curities Investor Protection Act (15 U.S.C. 78lll) is 

23 amended by adding at the end the following new 

24 paragraph: 


tjames on PRODPC75 with BILLS
6 

•HR 2798 IH

1 ‘‘(15) INSIDER.—The term ‘insider’ shall have 

2 the same meaning as in section 101(31) of title 11, 

3 United States Code.’’. 

4 (d) ELIGIBILITY FOR DIRECT PAYMENT PROCE5 DURE.—Section 10(a)(4) of the Securities Investor Pro6 tection Act (15 U.S.C. 78fff–4(a)(4)) is amended by strik7 ing out ‘‘$250,000’’ and inserting ‘‘$850,000’’. 

8 (e) INCREASING THE FINE FOR PROHIBITED ACTS

9 UNDER SIPA.—Section 14(c) of the Securities Investor 

10 Protection Act (15 U.S.C. 78jjj(c)) is amended by striking 

11 ‘‘$50,000’’ each place it appears and inserting 

12 ‘‘$250,000’’. 

13 (f) PENALTY FOR MISREPRESENTATION OF SIPC 

14 MEMBERSHIP OR PROTECTION.—Section 14 of the Securi15 ties Investor Protection Act (15 U.S.C. 78jjj) is amended 

16 by inserting at the end the following new subsection: 

17 ‘‘(d) MISREPRESENTATION OF SIPC MEMBERSHIP

18 OR PROTECTION.— 

19 ‘‘(1) Any person who falsely represents by any 

20 means (including through the Internet or any other 

21 medium of mass communication), with actual knowl22 edge of the falsity of the representation and with an 

23 intent to deceive or cause injury to another, that 

24 such person, or another person, is a member of 


tjames on PRODPC75 with BILLS
7 

•HR 2798 IH

1 SIPC or that any person or account is protected or 

2 is eligible for protection by SIPC, shall be— 

3 ‘‘(A) civilly liable for any damages caused 

4 thereby; and 

5 ‘‘(B) fined not more than $250,000 or im6 prisoned for not more than 5 years. 

7 ‘‘(2) Any Internet service provider who, on or 

8 through a system or network controlled or operated 

9 by the service provider, transmits, routes, provides 

10 connection for, or stores any material containing any 

11 misrepresentation described in paragraph (1) shall 

12 be civilly liable for any damages caused by such mis13 representation, including damages suffered by SIPC, 

14 if such Internet service provider— 

15 ‘‘(A) has actual knowledge that the mate16 rial contains a misrepresentation described in 

17 paragraph (1), or 

18 ‘‘(B) in the absence of actual knowledge, is 

19 aware of facts or circumstances from which it 

20 is apparent that such material contains a mis21 representation described in paragraph (1), and 

22 upon obtaining such knowledge or awareness, fails to 

23 act expeditiously to remove, or disable access to, 

24 such material. 


tjames on PRODPC75 with BILLS
8 

•HR 2798 IH

1 ‘‘(3) Any court having jurisdiction of a civil ac2 tion arising under this Act may grant temporary and 

3 final injunctions on such terms as it deems reason4 able to prevent or restrain any violation of para5 graph (1) or (2). Any such injunction may be served 

6 anywhere in the United States on the person en7 joined, shall be operative throughout the United 

8 States, and shall be enforceable, by proceedings in 

9 contempt or otherwise, by any United States court 

10 having jurisdiction over that person. The clerk of the 

11 court granting the injunction shall, when requested 

12 by any other court in which enforcement of the in13 junction is sought, transmit promptly to the other 

14 court a certified copy of all papers in the case on file 

15 in such clerk’s office.’’. 

16 SEC. 4. COMMISSION STUDY ON INTERNATIONAL FINAN17 CIAL COOPERATION. 

18 (a) SENSE OF CONGRESS REGARDING NECESSITY OF

19 AN INTERNATIONAL EFFORT TO INVESTIGATE AND

20 THWART GLOBAL INVESTMENT FRAUD.—It is the sense 

21 of Congress that— 

22 (1) international commerce and global invest23 ment have grown exponentially since World War II, 

24 creating a marketplace without borders; 


tjames on PRODPC75 with BILLS
9 

•HR 2798 IH

1 (2) investors of all sizes deserve assurances that 

2 their financial assets are protected from theft, and 

3 their transactions are legitimate and accounted for; 

4 and 

5 (3) the case against Bernard L. Madoff Invest6 ment Securities, Inc. represents one of the worst and 

7 most devastating instances of financial fraud and de8 ception in this Nation’s history, resulting in untold 

9 billions of dollars in missing assets and affecting 

10 thousands of investors in this Nation and around the 

11 globe. 

12 (b) FEDERAL COMMISSION ON INTERNATIONAL FI13 NANCIAL FRAUD.— 

14 (1) ESTABLISHMENT.—There is hereby estab15 lished within the Office of Inspector General of the 

16 Securities and Exchange Commission a Commission 

17 on International Financial Fraud (hereinafter in this 

18 subsection referred to as the ‘‘Commission’’). 

19 (2) MEMBERSHIP.—The Commission shall be 

20 composed of the following members: 

21 (A) The Chairman of the Board of Direc22 tors of the Securities Investor Protection Cor23 poration. 

24 (B) The Chairman of the Securities Ex25 change Commission. 


tjames on PRODPC75 with BILLS
10 

•HR 2798 IH

1 (C) The Secretary of the Treasury. 

2 (D) The Chairman of the Board of Gov3 ernors of the Federal Reserve System. 

4 (E) The Secretary of State. 

5 (F) The Director of the Federal Bureau of 

6 Investigation. 

7 (G) One or more additional individuals, at 

8 the discretion of the Inspector General of the 

9 Securities and Exchange Commission, where 

10 each such individual is the heads of a State, 

11 local, private, or not-for-profit entity dem12 onstrating research and academic expertise on 

13 issues pertaining to international investment 

14 and financial fraud. 

15 (3) DUTIES.—The Commission shall— 

16 (A) study potential relevance, structure, 

17 and long-term benefit of— 

18 (i) an international financial court; 

19 and 

20 (ii) establishing an international proc21 ess for the adjudication of cases of finan22 cial fraud; 

23 (B) establish partnerships with State, 

24 local, private, and not-for-profit entities dem25 onstrating research and academic expertise on 


tjames on PRODPC75 with BILLS
11 

•HR 2798 IH

1 issues pertaining to international investment 

2 and financial fraud; 

3 (C) subject to the approval of the Inspec4 tor General of the Securities and Exchange 

5 Commission, facilitate communication and in6 formation sharing with international public, pri7 vate, and not-for-private entities relating to— 

8 (i) the creation of an international fi9 nancial court; and 

10 (ii) establishing an international proc11 ess for the adjudication of cases of finan12 cial fraud; and 

13 (D) study investigative and insurance pro14 tection frameworks for international United 

15 States investments. 

16 (4) REPORTS.—Not later than 3 months after 

17 the date of the enactment of this Act, and quarterly 

18 thereafter, the Commission shall issue a report to 

19 the Congress containing— 

20 (A) the Commission’s recommendations on 

21 how an international financial court could be 

22 structured; 

23 (B) the Commission’s recommendation on 

24 how a process for the international adjudication 


tjames on PRODPC75 with BILLS
12 

•HR 2798 IH

1 of claims of financial fraud could be structured; 

2 and 

3 (C) any additional recommendations of the 

4 Commission. 

5 (5) TERMINATION.—The Commission shall ter6 minate on the date that is 1 year after the date of 

7 the enactment of this Act. 

8 (6) FUNDING.—The cost of funding the Com9 mission shall be divided equally among each Federal 

10 agency or department which is represented by a 

11 Member of the Commission. Notwithstanding the 

12 previous sentence, any State, local, private, or not13 for-profit entity that chooses to may also contribute 

14 funds to pay for the cost of funding the Commission. 

Æ 


tjames on PRODPC75 with BILLS