Source: https://www.legalcrystal.com/case/103760/sipc-vs-barbour
Timestamp: 2018-05-20 12:12:36
Document Index: 521142780

Matched Legal Cases: ['§ 78', '§ 404', '§ 564', '§ 14', '§ 27', '§ 14', '§ 27']

Sipc Vs Barbour - Citation 103760 - Court Judgment | LegalCrystal
Sipc Vs. Barbour - Court Judgment
LegalCrystal Citation legalcrystal.com/103760
Decided On May-19-1975
Case Number 421 U.S. 412
Appellant Sipc
Respondent Barbour
.....undeniable, and, for the respondent, we think, insurmountable. as with amtrak, so with the sipc, congress has created a corporate entity to solve a public problem; it has provided for substantial supervision of its operations by an agency charged with protection of the public interest -- here, the sec -- and for enforcement by that agency in court of the obligations imposed upon the corporation. the corporation is required to report to congress and the president, and to open its books and records to the sec and the comptroller general. further, congress has chartered the sipc, unlike amtrak, as a nonprofit corporation, and it has put its direction in the hands of a publicly chosen board of directors. beyond the inference to be drawn from the structure of the sipc, there is no.....
SIPC v. Barbour - 421 U.S. 412 (1975)
U.S. Supreme Court SIPC v. Barbour, 421 U.S. 412 (1975)
(a) The express statutory provision for one form of proceeding ordinarily implies that no other enforcement means was intended
by the legislature, and here the SIPA's legislative history was entirely consonant with the implication of the statutory language that no private right of action was intended. Cf. Passenger Corp. v. Passengers Assn., 414 U. S. 453 . Pp. 421 U. S. 418 -420.
(b) The overall structure and purpose of the SIPC scheme are incompatible with an implied private right of action, which might well precipitate liquidations that the SIPC, which treat that approach as a last resort, might be able to avoid. Pp. 421 U. S. 420 -423.
(c) The SIPA contains no standards of conduct that a private action could implement. J. I. Case Co. v. Borak, 377 U. S. 426 ; Allen v. State Board of Elections, 393 U. S. 544 , distinguished. Pp. 421 U. S. 423 -425.
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE:, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. DOUGLAS, J., dissented.
The Securities Investor Protection Corp. (SIPC) was established by Congress as a nonprofit membership corporation for the purpose, inter alia, of providing financial relief to the customers of failing broker-dealers with whom they had left cash or securities on deposit. The question presented by this case is whether such customers have an implied private right of action under the Securities Investor Protection Act of 1970 (Act or SIPA), 84 Stat. 1636, 15 U.S.C. § 78aaa et seq.,
If the court finds any of the five conditions on which
Passenger Corp. v. Passengers Assn., 414 U. S. 453 , 414 U. S. 457 -458 (1974) (hereinafter Amtrak ).
In Amtrak itself, the petitioner was a corporation created by Congress to assume from private railroads certain inter-city rail passenger service responsibilities. The respondent passenger association brought an action to enjoin the discontinuance of a particular service as announced by the corporation pursuant to its authority under § 404(b)(2) of the Rail Passenger Service Act of 1970 (Amtrak Act), 45 U.S.C. § 564(b)(2). That Act made express provision for suits against Amtrak to enforce its duties and obligations only "upon petition of the
The Court's analysis of the claim in Amtrak began with the observation that express statutory provision for one form of proceeding ordinarily implies that no other means of enforcement was intended by the Legislature. That implication would yield, however, to "clear contrary evidence of legislative intent," 414 U.S. at 414 U. S. 458 , for which we turned to the legislative history and the overall structure of the Amtrak Act.
Inspection revealed that the legislative history of the Amtrak Act was entirely consonant with the implication of the statutory language that no private right of action was intended. [ Footnote 1 ] The general structure and purpose of the Act gave further support to that conclusion. Congress had expected that, in creating an economically viable rail passenger system, some rail service would have to be discontinued by Amtrak; it had provided an efficient and expeditious means to that end, which seemed incompatible with an intent to allow a private action by any passenger affected by a discontinuance decision. [ Footnote 2 ]
Nor would the absence of a private right of action leave Amtrak free to disregard the public interest in its decisionmaking. In addition to investing the Attorney General with "authority to police the Amtrak system and to enforce the various duties and obligations imposed by the Act" by court action, Congress provided for "substantial scrutiny" over Amtrak's operations by requiring it to make periodic reports to Congress and the President and to open its books to the Comptroller General for auditing. 414 U.S. at 414 U. S. 464 .
Beyond the inference to be drawn from the structure of the SIPC, there is no extrinsic evidence that Congress intended to allow an action such as that before us. [ Footnote 3 ] As
The SIPC properly treats an application for the appointment of a receiver and liquidation of a brokerage firm as a last resort. It maintains an early warning system, and monitors the affairs of any firm that it is given reason to believe may be in danger of failure. Its experience to date demonstrates that, more often than not, an endangered firm will avoid collapse by infusion of new capital or merger with a stronger firm. [ Footnote 4 ] Even failing
The respondent in this case does not, of course, claim any right to make the decision that a firm should be liquidated; the Act makes that a judicial decision. He seeks only the right to ask the District Court to make that decision when both the SIPC and the SEC have refused or simply failed to do so. In practical effect, however, the difference is slight. Except with respect to the solidest of houses, the mere filing of an action predicated upon allegations of financial insecurity might often prove fatal. [ Footnote 5 ] Other customers could not be expected to leave
their cash and securities on deposit, nor other brokers to initiate new transactions that the firm might not be able to cover when due if a receiver is appointed, nor would suppliers be likely to continue dealing with such a firm. These consequences are too grave, and, when unnecessary, too inimical to the purposes of the Act, for the Court to impute to Congress an intent to grant to every member of the investing public control over their occurrence. On the contrary, they seem to be the very sorts of considerations that motivated Congress to put the SIPC in the hands of a public board of directors, responsible to an agency experienced in regulation of the securities markets. [ Footnote 6 ]
In J. I. Case, a stockholder sought damages against his corporation for its alleged misrepresentations, violative of § 14(a) of the Securities Exchange Act of 1934, in soliciting proxy votes for the approval of a merger. In light of the "broad remedial purposes" of the Act and the SEC's representation that private enforcement was necessary to effectuate those purposes, the Court held that the action for damages could be maintained.
The Court first concluded that it was "clear that private parties have a right under § 27 [of the Act] to bring suit for violation of § 14(a)," since § 27 specifically granted the district courts jurisdiction over " all suits in equity and actions at law brought to enforce any liability or duty created'" under the Act. 377 U.S. at 377 U. S. 430 -431. The more difficult question was whether the private parties, once in court, could seek damages as well as equitable relief. On this point, the Court agreed with the SEC that private enforcement of the proxy rules was a necessary supplement to SEC enforcement. Since there was no contrary indication from Congress, the Court so held, relying on the statement from Bell v. Hood, 327 U. S. 678 , 327 U. S. 684 (1946) that,
The Allen case arose under the Voting Rights Act of 1965. The question there was whether a private citizen could sue to set aside a state or local election law on the ground of its repugnancy to the Act. The federal statute provided that the Attorney General may bring such suits, but was silent as to the rights of others. It was clear to the Court -- and to the Attorney General -- that the Act would be practically unenforceable against the many local governments subject to its strictures if only the Attorney General were authorized to sue. We thus found it "consistent with the broad purpose of the Act to allow
the individual citizen standing to insure that his city or county government complies with" its requirements. 393 U.S. at 393 U. S. 557 .
For these reasons, we are unable to agree with the proposition that the customers of a member broker may sue to compel the SIPC to perform its statutory functions. [ Footnote 7 ] The Judgment of the Court of Appeals is reversed, and the case is remanded to the District Court with instructions that the receiver's petition for an order to show cause be dismissed.
See 414 U.S. at 414 U. S. 462 :