What Securities Investor Protection Act 1970 - 15 USC Chapter 2B-1 requires
Chapter 2B-1 of title 15 of the United States Code codifies the Securities Investor Protection Act of 1970 (Public Law 91-598), establishing the Securities Investor Protection Corporation (SIPC) as a non-profit membership corporation funded by member assessments on registered broker-dealers, and providing a customer-protection framework for failed brokerage firms. Section 78ccc establishes SIPC and its membership requirements covering substantially all registered broker-dealers under section 15(b) of the Securities Exchange Act of 1934 with limited exclusions. Section 78eee establishes the customer-protection procedure invoked when SIPC determines a member firm has failed or is in danger of failure and customers need protection; SIPC may apply to a federal district court for a protective decree appointing a trustee to liquidate the firm's business. Section 78fff governs the liquidation including the customer-property classification, the satisfaction of net equity claims, and SIPC advances up to the statutory limits (currently 500,000 USD per customer including a sub-limit of 250,000 USD for cash claims). Sections 78fff-1 through 78fff-4 govern trustee duties, customer notification, customer claims, distribution, and intercompany claims. Section 78lll provides essential definitions including the customer definition and excluded persons. SIPA is the operative US framework protecting brokerage customers against firm failure (distinct from FDIC deposit insurance) and shapes the cybersecurity, custody, and operational resiliency obligations of any member broker-dealer.
Pillar: Banking & Global Finance · Authority: United States Congress (Office of the Law Revision Counsel) · Version: 1.0.0 · Last updated:
Primary source: https://www.law.cornell.edu/uscode/text/15/chapter-2B-1
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Primary Citations — 8 traced to source
- 15 USC Chapter 2B-1 (Securities Investor Protection) https://www.law.cornell.edu/uscode/text/15/chapter-2B-1
- Securities Investor Protection Act of 1970, Public Law 91-598, enacted 30 December 1970
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