In a manner of speaking, yes. The SIPC has the authority (under 15 U.S.C. § 78eee(a)(3)(A)) to apply for protection order from the US District court if the SIPC determines that a member firm is struggling financially and i) is insolvent or unable to meet its obligations or ii) is the subject of a pending proceeding where a trustee or receiver has been appointed, or iii) is not in compliance with rules of the Securities Exchange Commission (SEC) or any self-regulatory organization with respect to financial responsibility or hypothecation of customers' securities; or iv) is unable to make such computations as may be necessary to establish compliance with such financial responsibility or hypothecation rules. The filing of an application initiates a civil case wherein the SIPC or the SEC (or perhaps both entities) act as plaintiffs and the brokerage firm is entered as a defendant. If the SIPC does not pursue the case, the SEC can force the SIPC to perform its duties under the SIPA (as per 15 U.S.C. § 78ggg(b)). Once an application is filed the US district court is granted exclusive jurisdiction over the case and the debtor. However, it is important to note that customers of the brokerage firm (ie account holders) may NOT force the SIPC to use its SIPA-granted authority on their behalf.
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In a manner of speaking, yes. The SIPC has the authority (under 15 U.S.C. § 78eee(a)(3)(A)) to apply for protection order from the US District court if the SIPC determines that a member firm is struggling financially and i) is insolvent or unable to meet its obligations or ii) is the subject of a pending proceeding where a trustee or receiver has been appointed, or iii) is not in compliance with rules of the Securities Exchange Commission (SEC) or any self-regulatory organization with respect to financial responsibility or hypothecation of customers' securities; or iv) is unable to make such computations as may be necessary to establish compliance with such financial responsibility or hypothecation rules. The filing of an application initiates a civil case wherein the SIPC or the SEC (or perhaps both entities) act as plaintiffs and the brokerage firm is entered as a defendant. If the SIPC does not pursue the case, the SEC can force the SIPC to perform its duties under the SIPA (as per 15 U.S.C. § 78ggg(b)). Once an application is filed the US district court is granted exclusive jurisdiction over the case and the debtor. However, it is important to note that customers of the brokerage firm (ie account holders) may NOT force the SIPC to use its SIPA-granted authority on their behalf.
