1.This Act may be cited as the
Equitable Treatment of Investors Act
.
2.Securities
Investor Protection Act of 1970 amendments
(a)Net equity based
on last statementSection
16(11) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(11))
is amended to read as follows:
(11)
(A)The term net
equity means the dollar amount of the account or accounts of a customer,
to be determined by—
(i)calculating the
sum which would have been owed by the debtor to such customer if the debtor had
liquidated, by sale or purchase on the filing date—
(I)all securities
positions of such customer (other than customer name securities reclaimed by
such customer); and
(II)all positions in
futures contracts and options on futures contracts held in a portfolio
margining account carried as a securities account pursuant to a portfolio
margining program approved by the Commission, including all property
collateralizing such positions, to the extent that such property is not
otherwise included herein; minus
(ii)any indebtedness
of such customer to the debtor on the filing date; plus
(iii)any payment by
such customer of such indebtedness to the debtor which is made with the
approval of the trustee and within such period as the trustee may determine
(but in no event more than sixty days after the publication of notice under
section 8(a)).
(B)Treatment of
certain commodity futures contractsA claim for a commodity futures contract
received, acquired, or held in a portfolio margining account pursuant to a
portfolio margining program approved by the Commission or a claim for a
security futures contract, shall be deemed to be a claim with respect to such
contract as of the filing date, and such claim shall be treated as a claim for
cash.
(C)Treatment of
accounts held by a customer in separate capacitiesIn determining
net equity under this paragraph, accounts held by a customer in separate
capacities shall be deemed to be accounts of separate customers.
(D)Reliance on
final customer statement
(i)In determining net equity under this paragraph, the
positions, options, and contracts of a customer held by the debtor, and any
indebtedness of the customer to the debtor, shall be determined based
on—
(I)the information
contained in the last statement received by the customer from the debtor before
the filing date; and
(II)any additional
specific confirmations of the customer’s positions, options, contracts, or
indebtedness received after such last statement but before the filing
date.
(ii)The provisions of this subparagraph shall not apply to
any customer that—
(I)knew the debtor
was involved in fraudulent activity with respect to any customer of the debtor;
or
(II)was a person
that—
- (aa)was, or was
required to be, registered with the Securities and Exchange Commission under
the securities laws (as such term is defined under section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)));
- (bb)knew, or should have known, that the debtor
was involved in fraudulent activity with respect to any customer of the debtor;
and
- (cc)did not notify SIPC, the Commission, or law
enforcement personnel that the debtor was involved in such fraudulent
activity.
.
(b)Prohibition on
certain recoveriesSection 8
of the Securities Investor Protection Act of 1970 (15 U.S.C. 78fff–2) is
amended by adding at the end the following new subsection:
(g)Prohibition on
certain recoveriesNotwithstanding any other provision of this
Act, a trustee may not recover any property transferred by the debtor to a
customer before the filing date unless, at the time of such transfer, such
customer—
(1)knew the debtor
was involved in fraudulent activity with respect to any customer of the debtor;
or
(2)was a person
that—
(A)was, or was required to be, registered with
the Securities and Exchange Commission under the securities laws (as such term
is defined under section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)));
(B)knew, or should have known, that the debtor
was involved in fraudulent activity with respect to any customer of the debtor;
and
(C)did not notify SIPC, the Commission, or law
enforcement personnel that the debtor was involved in such fraudulent
activity.
.
(c)
(1)Section 5(b)(3) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78eee(b)(3)) is amended to read as follows:
(3)Appointment of
trustee and attorney
(A)If the court issues a
protective decree under paragraph (1), such court shall forthwith appoint, as
trustee for the liquidation of the business of the debtor and as attorney for
the trustee, such persons as the court determines best fit to serve as trustee
and as attorney from among the persons selected by the Commission pursuant to
subparagraph (B). The persons appointed as trustee and as attorney for the
trustee may be associated with the same firm.
(B)With respect to a debtor and upon the court issuing a
protective decree under paragraph (1), the Commission shall forthwith provide
the court with a list of candidates for the position of trustee and attorney
for the trustee for such debtor.
(C)No person may be
appointed to serve as trustee or attorney for the trustee if such person is not
disinterested within the meaning of paragraph (6), except that for any
specified purpose other than to represent a trustee in conducting a liquidation
proceeding, the trustee may, with the approval of SIPC and the court, employ an
attorney who is not disinterested.
(D)A trustee appointed under this paragraph
shall qualify by filing a bond in the manner prescribed by section 322 of title
11, United States
Code.
.
(2)The amendment made by
paragraph (1) shall take effect with respect to trustees and attorneys
appointed after the date of the enactment of this Act.
3.Except as provided under
section 2(c)(2), the amendments made by section 2 shall take effect with
respect to a liquidation proceeding under the Securities Investor Protection
Act of 1970 that—
(1)was in progress on
the date of the enactment of this Act; or
(2)is initiated after
the date of the enactment of this Act.