What is the role of the SIPC trustee in an SIPA liquidation?
Under an SIPA liquidation, the SIPC trustee does not sell the securities and then distribute the proceeds and cash as under a typical liquidation bankruptcy but instead distributes the securities themselves to the respective owners to satisfy their claims against the debtor brokerage. Under 15 U.S.C. §78fff-2(d) the SIPC trustee is allowed to purchase securities to satisfy claims of particular investors. Among other responsibilities The SIPC trustee is also required to pay claims out of SIPC funds (as provided under (15 U.S.C. §§ 78fff-2(b) and 3(a)). The SIPC is permitted to make advances to the trustee for purposes of settling claims of investors/creditors.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
Under an SIPA liquidation, the SIPC trustee does not sell the securities and then distribute the proceeds and cash as under a typical liquidation bankruptcy but instead distributes the securities themselves to the respective owners to satisfy their claims against the debtor brokerage. Under 15 U.S.C. §78fff-2(d) the SIPC trustee is allowed to purchase securities to satisfy claims of particular investors. Among other responsibilities The SIPC trustee is also required to pay claims out of SIPC funds (as provided under (15 U.S.C. §§ 78fff-2(b) and 3(a)). The SIPC is permitted to make advances to the trustee for purposes of settling claims of investors/creditors.
