[ocr errors][ocr errors]



(References in brackets [ ] are to title 15, United States Code) AN ACT to provide greater protection for customers of registered brokers and

dealers and members of national securities exchanges. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. [78aaa] SHORT TITLE, ETC.

(a) SHORT TITLE; TABLE OF CONTENTS.—This Act, with the following table of contents, may be cited as the “Securities Investor Protection Act of 1970”.

Sec. 1. Short title.
Sec. 2. Application of Securities Exchange Act of 1934.
Sec. 3. Securities Investor Protection Corporation.
Sec. 4. SIPC Fund.
Sec. 5. Protection of customers.
Sec. 6. General provisions of a liquidation proceeding.
Sec. 7. Powers and duties of trustee.
Sec. 8. Special provisions of a liquidation proceeding.
Sec. 9. SIPC advances.
Sec. 10. Direct payment procedure.
Sec. 11. SEC functions.
Sec. 12. Examining authority functions.
Sec. 13. Functions of self-regulatory organizations.
Sec. 14. Prohibited acts.
Sec. 15. Miscellaneous provisions.
Sec. 16. Definitions.

(b) SECTION HEADINGS.-Headings for sections and subsections, and the table of contents, are included only for convenience, and shall be given no legal effect. SEC. 2. [78bbb] APPLICATION OF SECURITIES EXCHANGE ACT OF 1934.

Except as otherwise provided in this Act, the provisions of the Securities Exchange Act of 1934 (15 U.S.C., sec. 78a and fol.; hereinafter referred to as the “1934 Act”) apply as if this Act constituted an amendment to, and was included as a section of, such Act. SEC. 3. [78ccc] SECURITIES INVESTOR PROTECTION CORPORATION. (a) CREATION AND MEMBERSHIP.(1) CREATION.—There is hereby established a body corporate

a to be known as the “Securities Investor Protection Corporation” (hereafter in this Act 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 Act, be subject to, and have all the powers conferred upon a nonprofit cor

[ocr errors]
[ocr errors]

poration by, the District of Columbia Nonprofit Corpora

tion Act (D.C. Code, section 29-1001 and fol.). (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 15(b) of the 1934 Act, 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; and

(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. (B) COMMISSION REVIEW.-SIPC shall file with the Commission a copy of any determination made pursuant to subparagraph (A)(i). Within thirty days after the date of such filing, 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, the Commission shall, consistent with the public interest and the purposes of this Act, affirm, reverse, or amend any such determination of SIPC.

(C) ADDITIONAL MEMBERS.—SIPC shall provide by rule that persons excluded from membership in SIPC under subparagraph (A)(i) may become members of SIPC under such conditions and upon such terms as SIPC shall require by rule, taking into account such matters as the availability of assets and the ability to conduct a liquidation if necessary.

(D) DISCLOSURE.—Any broker or dealer excluded from membership in SIPC under subparagraph (A)(i) shall, as required by the Commission by rule, make disclosures of its exclusion and other relevant information to the customers of such broker or dealer who are living in the United

States or its territories and possessions. (b) POWERS.—In addition to the powers granted to SIPC elsewhere in this Act, 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 Act, including bylaws relating to

(A) the conduct of its business; and

« ForrigeFortsett »