§ 78ccc. — Securities Investor Protection Corporation.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78ccc]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B-1--SECURITIES INVESTOR PROTECTION
Sec. 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
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 chapter, 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 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) of this section,
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
SIPC shall have a Board of Directors which, subject to the
provisions of this chapter, shall determine the policies which shall
govern the operations of SIPC.
(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
The President shall designate a Chairman and Vice Chairman from
among those directors appointed under paragraph (2)(C)(ii) of this
subsection.
(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
All matters relating to compensation of directors shall be as
provided in the bylaws of SIPC.
(d) Meetings of Board
The Board of Directors shall meet at the call of its Chairman, or as
otherwise provided by the bylaws of SIPC.
(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
The Board of Directors of SIPC shall file with the
Commission, in accordance with such rules as the Commission may
prescribe, a copy of any proposed rule or any proposed amendment
to or repeal of any rule of SIPC (hereinafter in this subsection
collectively referred to as a ``proposed rule change''),
accompanied by a concise general statement of the basis and
purpose of such proposed rule change. The Commission shall, upon
the filing of any proposed rule change, publish notice thereof,
together with the terms of substance of such proposed rule
change or a description of the subjects and issues involved. The
Commission shall give interested persons an opportunity to
submit written data, views, and arguments with respect to such
proposed rule change. No proposed rule change shall take effect
unless approved by the Commission or otherwise permitted in
accordance with the provisions of this paragraph.
(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
Proceedings instituted with respect to a proposed rule
change pursuant to subparagraph (B)(ii) shall include notice of
the grounds for disapproval under consideration and opportunity
for hearing, and shall be concluded within one hundred eighty
days after the date of publication of notice of the filing of
such proposed rule change. At the conclusion of such
proceedings, the Commission shall, by order, approve or
disapprove such proposed rule change. The Commission may extend
the time for conclusion of such proceedings for not more than
sixty days if it finds good cause for such extension and
publishes its reasons for so finding, or for such longer period
as to which SIPC consents.
(D) Grounds for approval or disapproval
The Commission shall approve a proposed rule change if it
finds that such proposed rule change is in the public interest
and is consistent with the purposes of this chapter, and any
proposed rule change so approved shall be given force and effect
as if promulgated by the Commission. The Commission shall
disapprove a proposed rule change if it does not make the
finding referred to in the preceding sentence. The Commission
shall not approve any proposed rule change prior to thirty days
after the date of publication of notice of the filing thereof,
unless the Commission finds good cause for so doing and
publishes its reasons for so finding.
(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
The Commission may, by such rules as it determines to be
necessary or appropriate in the public interest or to carry out the
purposes of this chapter, require SIPC to adopt, amend, or repeal
any SIPC bylaw or rule, whenever adopted.
(Pub. L. 91-598, Sec. 3, Dec. 30, 1970, 84 Stat. 1637; Pub. L. 95-283,
Secs. 2-5, May 21, 1978, 92 Stat. 249-251; Pub. L. 106-554, Sec. 1(a)(5)
[title II, Sec. 203(d)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A-424.)
References in Text
This chapter, referred to in subsecs. (a) to (c) and (e), was in the
original ``this Act'', meaning Pub. L. 91-598, Dec. 30, 1970, 84 Stat.
1636. For complete classification of this Act to the Code, see Tables.
The District of Columbia Nonprofit Corporation Act, referred to in
subsec. (a)(1)(B), is Pub. L. 87-569, Aug. 6, 1962, 76 Stat. 265, as
amended, which is not classified to the Code.
Amendments
2000--Subsec. (a)(2)(A)(iii). Pub. L. 106-554 added cl. (iii).
1978--Subsec. (a). Pub. L. 95-283, Sec. 2(a), substituted ``Creation
and membership'' for ``Creation'' in heading, redesignated introductory
text and cls. (1) and (3) as par. (1), and added par. 2 which
incorporated provisions formerly contained in cl. (2) as par. (2)(A).
Subsec. (b). Pub. L. 95-283, Sec. 3, in par. (1) substituted
``State, Federal, or other court'' for ``court, State, or Federal'', in
par. (3) substituted provisions relating to adoption, etc., of bylaws by
the Board of Directors, for provisions relating to adoption, etc., of
bylaws and rules by the Board of Directors, added par. (4), and
redesignated former pars. (4) to (8) as (5) to (9), respectively.
Subsec. (c)(2)(C)(ii). Pub. L. 95-283, Sec. 4(a), substituted ``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,''
for ``any broker or dealer, within the meaning of paragraph (18) of
section 78c(a) of this title, or similarly associated with a national
securities exchange or other securities industry group''.
Subsec. (c)(5). Pub. L. 95-283, Sec. 4(b), substituted
``Compensation'' for ``Compensation, etc.'' in heading, and in text
struck out provisions relating to determinations of dollar volume of
trading on exchanges.
Subsec. (e). Pub. L. 95-283, Sec. 5, inserted ``and rules'' after
``Bylaws'' in heading, and in text substituted provisions relating to
procedures applicable to proposed changes in the bylaws and rules of
SIPC and required action by the Commission with respect to any SIPC
bylaw or rule, for provisions relating to procedures applicable to
adoption of initial bylaws and rules of SIPC and any alteration,
supplement, repeal, or addition, effective date of any such bylaw or
rule, and required action by the Commission with respect to any SIPC
bylaw or rule.
Subsec. (f). Pub. L. 95-283, Sec. 2(b), struck out subsec. (f) which
set forth qualifications for other members of SIPC.
Section Referred to in Other Sections
This section is referred to in section 78ggg of this title.
