15 USC 78ccc - Securities Investor Protection Corporation

U.S Code last checked for updates: Nov 22, 2024

§ 78ccc.

Securities Investor Protection Corporation

(a)

Creation and membership

(1)

Creation

There is hereby established a body corporate to be known as the “Securities Investor Protection Corporation” (hereafter in this chapter referred to as “SIPC”). SIPC shall be a nonprofit corporation and shall have succession until dissolved by Act of the Congress. SIPC shall—

(A)

not be an agency or establishment of the United States Government; and

(B)

except as otherwise provided in this chapter, be subject to, and have all the powers conferred upon a nonprofit corporation by, the District of Columbia Nonprofit Corporation Act.

(2)

Membership

(A)

Members of SIPC

SIPC shall be a membership corporation the members of which shall be all persons registered as brokers or dealers under section 78o(b) of this title, other than—

(i)

persons whose principal business, in the determination of SIPC, taking into account business of affiliated entities, is conducted outside the United States and its territories and possessions;

(ii)

persons whose business as a broker or dealer consists exclusively of (I) the distribution of shares of registered open end investment companies or unit investment trusts, (II) the sale of variable annuities, (III) the business of insurance, or (IV) the business of rendering investment advisory services to one or more registered investment companies or insurance company separate accounts; and

(iii)

persons who are registered as a broker or dealer pursuant to section 78o(b)(11)(A) of this title.

(B)

Commission review

(C)

Additional members

(D)

Disclosure

(b)

Powers

In addition to the powers granted to SIPC elsewhere in this chapter, SIPC shall have the power—

(1)

to sue and be sued, complain and defend, in its corporate name and through its own counsel, in any State, Federal, or other court;

(2)

to adopt, alter, and use a corporate seal, which shall be judicially noticed;

(3)

to adopt, amend, and repeal, by its Board of Directors, such bylaws as may be necessary or appropriate to carry out the purposes of this chapter, including bylaws relating to—

(A)

the conduct of its business; and

(B)

the indemnity of its directors, officers, and employees (including any such person acting as trustee or otherwise in connection with a liquidation proceeding) for liabilities and expenses actually and reasonably incurred by any such person in connection with the defense or settlement of an action or suit if such person acted in good faith and in a manner reasonably believed to be consistent with the purposes of this chapter.

(4)

to adopt, amend, and repeal, by its Board of Directors, such rules as may be necessary or appropriate to carry out the purposes of this chapter, including rules relating to—

(A)

the definition of terms used in this chapter, other than those terms for which a definition is provided in section 78lll of this title;

(B)

the procedures for the liquidation of members and direct payment procedures, including the transfer of customer accounts, the distribution of customer property, and the advance and payment of SIPC funds; and

(C)

the exercise of all other rights and powers granted to it by this chapter;

(5)

to conduct its business (including the carrying on of operations and the maintenance of offices) and to exercise all other rights and powers granted to it by this chapter in any State or other jurisdiction without regard to any qualification, licensing, or other statute in such State or other jurisdiction;

(6)

to lease, purchase, accept gifts or donations of or otherwise acquire, to own, hold, improve, use, or otherwise deal in or with, and to sell, convey, mortgage, pledge, lease, exchange or otherwise dispose of, any property, real, personal or mixed, or any interest therein, wherever situated;

(7)

subject to the provisions of subsection (c), to elect or appoint such officers, attorneys, employees, and agents as may be required, to determine their qualifications, to define their duties, to fix their salaries, require bonds for them and fix the penalty thereof;

(8)

to enter into contracts, to execute instruments, to incur liabilities, and to do any and all other acts and things as may be necessary or incidental to the conduct of its business and the exercise of all other rights and powers granted to SIPC by this chapter; and

(9)

by bylaw, to establish its fiscal year.

(c)

Board of Directors

(1)

Functions

(2)

Number and appointment

The Board of Directors shall consist of seven persons as follows:

(A)

One director shall be appointed by the Secretary of the Treasury from among the officers and employees of the Department of the Treasury.

(B)

One director shall be appointed by the Federal Reserve Board from among the officers and employees of the Federal Reserve Board.

(C)

Five directors shall be appointed by the President, by and with the advice and consent of the Senate, as follows—

(i)

three such directors shall be selected from among persons who are associated with, and representative of different aspects of, the securities industry, not all of whom shall be from the same geographical area of the United States, and

(ii)

two such directors shall be selected from the general public from among persons who are not associated with a broker or dealer or associated with a member of a national securities exchange, within the meaning of section 78c(a)(18) or section 78c(a)(21), respectively, of this title, or similarly associated with any self-regulatory organization or other securities industry group, and who have not had any such association during the two years preceding appointment.

(3)

Chairman and Vice Chairman

(4)

Terms

(A)

Except as provided in subparagraphs (B) and (C), each director shall be appointed for a term of three years.

(B)

Of the directors first appointed under paragraph (2)—

(i)

two shall hold office for a term expiring on December 31, 1971,

(ii)

two shall hold office for a term expiring on December 31, 1972, and

(iii)

three shall hold office for a term expiring on December 31, 1973,

as designated by the President at the time they take office. Such designation shall be made in a manner which will assure that no two persons appointed under the authority of the same clause of paragraph (2)(C) shall have terms which expire simultaneously.

(C)

A vacancy in the Board shall be filled in the same manner as the original appointment was made. Any director appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the remainder of such term. A director may serve after the expiration of his term until his successor has taken office.

(5)

Compensation

(d)

Meetings of Board

(e)

Bylaws and rules

(1)

Proposed bylaw changes

The Board of Directors of SIPC shall file with the Commission a copy of any proposed bylaw or any proposed amendment to or repeal of any bylaw of SIPC (hereinafter in this paragraph collectively referred to as a “proposed bylaw change”), accompanied by a concise general statement of the basis and purpose of such proposed bylaw change. Each such proposed bylaw change shall take effect thirty days after the date of the filing of a copy thereof with the Commission, or upon such later date as SIPC may designate or such earlier date as the Commission may determine, unless—

(A)

the Commission, by notice to SIPC setting forth the reasons therefor, disapproves such proposed bylaw change as being contrary to the public interest or contrary to the purposes of this chapter; or

(B)

the Commission finds that such proposed bylaw change involves a matter of such significant public interest that public comment should be obtained, in which case it may, after notifying SIPC in writing of such finding, require that the procedures set forth in paragraph (2) be followed with respect to such proposed bylaw change, in the same manner as if such proposed bylaw change were a proposed rule change within the meaning of such paragraph.

(2)

Proposed rule changes

(A)

Filing of proposed rule changes

(B)

Action by the Commission

Within thirty-five days after the date of publication of notice of the filing of a proposed rule change, or within such longer period as the Commission may designate of not more than ninety days after such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or as to which SIPC consents, the Commission shall—

(i)

by order approve such proposed rule change; or

(ii)

institute proceedings to determine whether such proposed rule change should be disapproved.

(C)

Proceedings

(D)

Grounds for approval or disapproval

(E)

Exception

Notwithstanding any other provision of this paragraph, a proposed rule change may take effect—

(i)

upon the date of filing with the Commission, if such proposed rule change is designated by SIPC as relating solely to matters which the Commission, consistent with the public interest and the purposes of this subsection, determines by rule do not require the procedures set forth in this paragraph; or

(ii)

upon such date as the Commission shall for good cause determine. Any proposed rule change which takes effect under this clause shall be filed promptly thereafter and reviewed in accordance with the provisions of subparagraph (A).

At any time within sixty days after the date of filing of any rule change which has taken effect pursuant to this subparagraph, the Commission may summarily abrogate such rule change and require that it be refiled and reviewed in accordance with the provisions of this paragraph, if the Commission finds that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this chapter. Any action of the Commission pursuant to the preceding sentence shall not affect the validity or force of a rule change during the period it was in effect and shall not be reviewable under section 78y of this title or deemed to be final agency action for purposes of section 704 of title 5.

(3)

Action required by Commission

(Pub. L. 91–598, § 3, Dec. 30, 1970, 84 Stat. 1637; Pub. L. 95–283, §§ 2–5, May 21, 1978, 92 Stat. 249–251; Pub. L. 106–554, § 1(a)(5) [title II, § 203(d)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–424.)

cite as: 15 USC 78ccc