Opinion ID: 786487
Heading Depth: 4
Heading Rank: 1

Heading: The SEC's Interpretation Furthers SIPA's Investor Protection Goals

Text: 51 Examination of SIPA's legislative history reveals that the SEC's interpretation is better tailored to the original aims of SIPA's drafters. Congress enacted SIPA in 1970, in response to a rash of failures among securities broker-dealers in the late 1960s that had resulted in significant losses to customers whose assets either were unrecoverable or became tied up in the broker-dealers' bankruptcy proceedings. Sec. Investor Prot. Corp. v. BDO Seidman, LLP, 222 F.3d 63, 66 (2d Cir.2000). The statute was designed to effect two aims. H.R. REP. No. 91-1613, at 2-4 (1970), reprinted in 1970 U.S.C.C.A.N. 5254, 5257. First, the legislation immediately established a substantial reserve fund ... [to] provide protection to customers of broker-dealers ... to reinforce the confidence that investors have in the U.S. securities markets. Id. Second, SIPA strengthen[ed] ... the financial responsibilities of broker-dealers. Id. Later amendments to the statute have reiterated this emphasis on investor protection. In 1978, the statute was amended to, inter alia, increase[] the amounts available to be distributed in liquidations to each customer from $50,000 to $100,000; no more than $40,000 (instead of the present $20,000) is available to satisfy claims for cash. 18 S. REP. No. 95-763, at 2 (1978), reprinted in 1978 U.S.C.C.A.N. 764, 765. These and other changes included in the 1978 amendments were intended to address the perceived limitations ... upon SIPC's ability to provide the type and degree of protection for securities customers for which SIPA was enacted. Specifically, these limitations in some cases impair the satisfaction of customers' claims as fully, promptly and efficiently as the Committee believes is desirable. Id. These statutory goals — promoting investor confidence and providing protection to investors — are better served by the SEC's broader reading of section 9(a)(1). 19 See Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967) (We are guided by the familiar canon of statutory construction that remedial legislation should be construed broadly to effectuate its purposes.) (interpreting the 1934 Securities Exchange Act). 52