I 112th CONGRESS 2d Session H. R. 4002 IN THE HOUSE OF REPRESENTATIVES February 9, 2012 Mr. Cassidy (for himself, Mr. Deutch, Mr. Harper, Mr. Duncan of Tennessee, Mr. Alexander, Mr. West, Mr. Boustany, Mr. Culberson, Mr. McCaul, Mr. Landry, Mr. Sessions, Mr. Griffin of Arkansas, and Mr. Hastings of Florida) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Securities Investor Protection Act of 1970 to provide one-time payments from the SIPC Fund for customers during a pending lawsuit by the Securities and Exchange Commission against the Securities Investor Protection Corporation, and for other purposes.

1.

Short title

This Act may be cited as the Improving Security for Investors and Providing Closure Act of 2012 or the Improving SIPC Act of 2012.

2.

Customer payment during pending action

(a)

In general

Section 11 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ggg) is amended— (1)by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and (2)by inserting after subsection (b) the following: (c)

Customer payment during pending action

(1)

One-time payment permitted

(A)

In general

At the time that an action is initiated under subsection (b), SIPC may choose to allow all customers of the debtor to elect to receive a one-time payment from the SIPC Fund to settle their net equity claims against the debtor. (B)

Customer election

If SIPC allows customers to make the election described under subparagraph (A), each customer choosing to make such election— (i)must make such election during the action brought under subsection (b), but in no case later than the 180-day period beginning on the date that SIPC chooses to allow such election; and (ii)shall forgo all other possible protections under this Act with respect to the debtor. (2)

Method of payment

(A)

In general

To the extent practicable, one-time payments made under this subsection shall be made in the same manner as payments of net equity claims of customers of a debtor are made under the other provisions of this Act. (B)

Payment amount limited to claims

The amount paid to a customer under this subsection may not exceed the customer’s net equity claims against the debtor. (3)

Cap on one-time payments

At the time the action is initiated under subsection (b), SIPC shall set a cap on the amount of one-time payments that can be made under this subsection, and such cap— (A)shall not exceed $500,000; and (B)shall apply equally to all customers of the debtor. (4)

Effect of election

With respect to any customer who receives a one-time payment under this subsection, SIPC shall be subrogated to all rights of the customer against the debtor, regardless of whether the one-time payment was in an amount to fully satisfy the customer’s claims against the debtor. (5)

Notice; technical assistance

If SIPC allows customers to make the election described under paragraph (1)(A), SIPC shall— (A)promptly notify each customer of the debtor of their rights under this subsection; and (B)provide technical assistance to such customers to determine if they should make an election under paragraph (1)(B). (6)

Treatment of certificates of deposit

For purposes of this subsection, a certificate of deposit purchased by a person through an account with the debtor shall be treated as cash deposited and held by the debtor in an amount equal to the amount the person paid for the certificate of deposit, less any amounts paid to such person on the certificate of deposit. (7)

Rulemaking

SIPC may issue such regulations as may be necessary to carry out this subsection. (8)

Debtor defined

For purposes of this subsection, the term debtor means the broker or dealer that is the subject of the action brought under subsection (b). . (b)

Application

With respect to an ongoing action brought under section 11(b) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ggg(b)) before the date of the enactment of this Act, the customer election available under section 11(c) of such Act may be made during the 180-day period beginning on the date of the enactment of this Act.