Opinion ID: 769835
Heading Depth: 4
Heading Rank: 1

Heading: Standing as subrogee

Text: 11 The SIPC's standing as the subrogee to the claims of Baron's customers rests on our holding in Redington v. Touche Ross & Co., 592 F.2d 617 (2d Cir. 1978), rev'd and remanded on other grounds, 442 U.S. 560 (1979). In Redington, we relied on principles of insurance law to hold that the SIPC, as subrogee of the customers of a failed broker-dealer, enjoyed a general common-law right of equitable subrogation. Id.at 624. Specifically, we noted that at common law, an insurer may be subrogated to any right of action which the insured may have against a third person whose negligence or wrongful act caused the loss, and that nothing in the SIPA exempted the SIPC from this general rule. Id. (quoting 31 N.Y. Jur., Insurance § 1620, at 510). Furthermore, we found inconsistent with the Congressional intent underlying the SIPA the notion that wrongdoers should receive the windfall that would result if the SIPC were unable to recover its insurance payments from the parties ultimately responsible for the customers' losses. Based on these principles of subrogation, we held that the SIPC, as subrogee, had the power to sue a broker-dealer's accountant for filing false or misleading reports pursuant to the audit requirements of Rule 17a. See id. 12 The district court in this case determined that it was bound by our decision in Redington to find that the SIPC had standing to pursue claims on behalf of customers. In so holding, the district court questioned the wisdom of the Redington decision, see Seidman, 49 F. Supp. 2d at 653-55, and on appeal Seidman urges us to overturn that case and find that the SIPC has no standing as the customers' subrogee to assert claims against third parties. Even if we were justified in revisiting the Redingtondecision, however, seeIn re Sokolowski, 205 F.3d 532, 534-35 (2d Cir. 2000) (This court is bound by a decision of a prior panel unless and until its rationale is overruled, implicitly or expressly, by the Supreme Court or this court en banc.) (citations and internal quotation marks omitted), we need not do so in this case, as we hold that the SIPC's claims on behalf of Baron's customers fail under Rule 12(b)(6). See infra Part II. We therefore assume, without deciding, that the SIPC has standing as the customers' subrogee, but find that the district court was correct in dismissing its claims on substantive grounds.