Opinion ID: 786487
Heading Depth: 3
Heading Rank: 1

Heading: sipa

Text: 26 By the explicit language of SIPA, SIPC is not an agency or establishment of the United States Government. 15 U.S.C. § 78ccc(a)(1)(A). SIPC asserts that although it is not an agency  per se,  it is, under SIPA, an independent corporation endowed with its own voice and responsibilities in the conduct of liquidations and payment of net equity claims from the SIPC Fund. Letter from Harbeck, General Counsel, SIPC, to the Court of 7/3/03 (Harbeck Letter), at 1. According to SIPC, the SEC possesses potential supervisory authority in some but not all areas of SIPC's operations. Id. (citing 15 U.S.C. § 78ggg(c)). Although we agree with SIPC that the drafters of SIPA clearly envisioned roles for both the SEC and SIPC in administering the statute, 11 see 3 THOMAS LEE HAZEN, LAW SECURITIES REGULATION § 14.24 (2002), we find that Congress deliberately limited the authority of SIPC relative to the SEC. 27 The Supreme Court held in Securities Investor Protection Corporation v. Barbour, 421 U.S. 412, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975), that SIPA invests the SEC with `plenary authority' to supervise the SIPC. Id. at 417, 95 S.Ct. 1733. Indeed, SIPA drafters seem to have anticipated substantial and vigorous oversight of SIPC by the SEC. H.R. REP. No. 91-1613, at 11-12 (1970), reprinted in 1970 U.S.C.C.A.N. 5254, 5265 (explaining that SIPA provides for substantial oversight on the part of the Commission over the conduct of the affairs of SIPC); id. at 5266 (noting that the House Committee on Interstate and Foreign Commerce not only directs, but expects the Commission to use its oversight in a vigorous, but fair, manner); see also Sec. Investor Prot. Corp. v. Charisma Sec. Corp., 506 F.2d 1191, 1196 & n. 7 (2d Cir.1974) (In fact, it is contemplated that the SEC will exercise a supervisory role over SIPC performance.). 28 For example, although SIPA provides SIPC with the power to adopt, amend or repeal bylaws and rules as necessary or appropriate to further the purposes of SIPA, 15 U.S.C. § 78ccc(b)(3), (4), the SEC may disapprove any such bylaw in whole or in part, and any proposed rule or rule change must be filed with and approved by the SEC before it takes effect, id. § 78ccc(e)(1)(A), (2). Indeed, the Series 500 Rules, 17 C.F.R. §§ 300.500-.503, which the District Court held govern this case, 12 see Goren, 206 F.Supp.2d at 350-51, were proposed by SIPC and approved by the SEC in just that manner, see 17 C.F.R. § 300.100 (explanatory note). SIPA also empowers the SEC to take an even more proactive rule-making role: The [SEC] may, by such rules as it determines to be necessary or appropriate in the public interest or to carry out the purposes of this chapter, require SIPC to adopt, amend or repeal any SIPC bylaw or rule, whenever adopted. 15 U.S.C. § 78ccc(e)(3) (emphasis added). 29 In addition, the SEC may, on its own motion, file an appearance in any SIPC-initiated proceeding and may thereafter participate as a party. Id. § 78eee(c). Even more significantly, [i]n the event of the refusal of SIPC to commit its funds or otherwise to act for the protection of customers of any member of SIPC, SIPA authorizes the SEC to seek a court order requiring SIPC to discharge its obligations under [SIPA] and for such other relief as the court may deem appropriate to carry out the purposes of [SIPA]. Id. § 78ggg(b); see also Barbour, 421 U.S. at 417-18, 95 S.Ct. 1733; 3 HAZEN, supra, § 14.24. 30