§ 78lll. — Definitions.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78lll]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B-1--SECURITIES INVESTOR PROTECTION
Sec. 78lll. Definitions
For purposes of this chapter, including the application of the
Bankruptcy Act to a liquidation proceeding:
(1) Commission
The term ``Commission'' means the Securities and Exchange
Commission.
(2) Customer
The term ``customer'' of a debtor means any person (including
any person with whom the debtor deals as principal or agent) who has
a claim on account of securities received, acquired, or held by the
debtor in the ordinary course of its business as a broker or dealer
from or for the securities accounts of such person for safekeeping,
with a view to sale, to cover consummated sales, pursuant to
purchases, as collateral security, or for purposes of effecting
transfer. The term ``customer'' includes any person who has a claim
against the debtor arising out of sales or conversions of such
securities, and any person who has deposited cash with the debtor
for the purpose of purchasing securities, but does not include--
(A) any person to the extent that the claim of such person
arises out of transactions with a foreign subsidiary of a member
of SIPC; or
(B) any person to the extent that such person has a claim
for cash or securities which by contract, agreement, or
understanding, or by operation of law, is part of the capital of
the debtor, or is subordinated to the claims of any or all
creditors of the debtor, notwithstanding that some ground exists
for declaring such contract, agreement, or understanding void or
voidable in a suit between the claimant and the debtor.
(3) Customer name securities
The term ``customer name securities'' means securities which
were held for the account of a customer on the filing date by or on
behalf of the debtor and which on the filing date were registered in
the name of the customer, or were in the process of being so
registered pursuant to instructions from the debtor, but does not
include securities registered in the name of the customer which, by
endorsement or otherwise, were in negotiable form.
(4) Customer property
The term ``customer property'' means cash and securities (except
customer name securities delivered to the customer) at any time
received, acquired, or held by or for the account of a debtor from
or for the securities accounts of a customer, and the proceeds of
any such property transferred by the debtor, including property
unlawfully converted. The term ``customer property'' includes--
(A) securities held as property of the debtor to the extent
that the inability of the debtor to meet its obligations to
customers for their net equity claims based on securities of the
same class and series of an issuer is attributable to the
debtor's noncompliance with the requirements of section
78o(c)(3) of this title and the rules prescribed under such
section;
(B) resources provided through the use or realization of
customers' debit cash balances and other customer-related debit
items as defined by the Commission by rule;
(C) any cash or securities apportioned to customer property
pursuant to section 78fff(d) of this title; and
(D) any other property of the debtor which, upon compliance
with applicable laws, rules, and regulations, would have been
set aside or held for the benefit of customers, unless the
trustee determines that including such property within the
meaning of such term would not significantly increase customer
property.
(5) Debtor
The term ``debtor'' means a member of SIPC with respect to whom
an application for a protective decree has been filed under section
78eee(a)(3) of this title or a direct payment procedure has been
instituted under section 78fff-4(b) of this title.
(6) Examining authority
The term ``examining authority'' means, with respect to any
member of SIPC (A) the self-regulatory organization which inspects
or examines such member of SIPC, or (B) the Commission if such
member of SIPC is not a member of or participant in any self-
regulatory organization or if the Commission has designated itself
examining authority for such member pursuant to section 78iii(c) of
this title.
(7) Filing date
The term ``filing date'' means the date on which an application
for a protective decree is filed under section 78eee(a)(3) of this
title, except that--
(A) if a petition under title 11 concerning the debtor was
filed before such date, the term ``filing date'' means the date
on which such petition was filed;
(B) if the debtor is the subject of a proceeding pending in
any court or before any agency of the United States or any State
in which a receiver, trustee, or liquidator for such debtor has
been appointed and such proceeding was commenced before the date
on which such application was filed, the term ``filing date''
means the date on which such proceeding was commenced; or
(C) if the debtor is the subject of a direct payment
procedure or was the subject of a direct payment procedure
discontinued by SIPC pursuant to section 78fff-4(f) of this
title, the term ``filing date'' means the date on which notice
of such direct payment procedure was published under section
78fff-4(b) of this title.
(8) Foreign subsidiary
The term ``foreign subsidiary'' means any subsidiary of a member
of SIPC which has its principal place of business in a foreign
country or which is organized under the laws of a foreign country.
(9) Gross revenues from the securities business
The term ``gross revenues from the securities business'' means
the sum of (but without duplication)--
(A) commissions earned in connection with transactions in
securities effected for customers as agent (net of commissions
paid to other brokers and dealers in connection with such
transactions) and markups with respect to purchases or sales of
securities as principal;
(B) charges for executing or clearing transactions in
securities for other brokers and dealers;
(C) the net realized gain, if any, from principal
transactions in securities in trading accounts;
(D) the net profit, if any, from the management of or
participation in the underwriting or distribution of securities;
(E) interest earned on customers' securities accounts;
(F) fees for investment advisory services (except when
rendered to one or more registered investment companies or
insurance company separate accounts) or account supervision with
respect to securities;
(G) fees for the solicitation of proxies with respect to, or
tenders or exchanges of, securities;
(H) income from service charges or other surcharges with
respect to securities;
(I) except as otherwise provided by rule of the Commission,
dividends and interest received on securities in investment
accounts of the broker or dealer;
(J) fees in connection with put, call, and other option
transactions in securities;
(K) commissions earned from transactions in (i) certificates
of deposit, and (ii) Treasury bills, bankers acceptances, or
commercial paper which have a maturity at the time of issuance
of not exceeding nine months, exclusive of days of grace, or any
renewal thereof, the maturity of which is likewise limited,
except that SIPC shall by bylaw include in the aggregate of
gross revenues only an appropriate percentage of such
commissions based on SIPC's loss experience with respect to such
instruments over at least the preceding five years; and
(L) fees and other income from such other categories of the
securities business as SIPC shall provide by bylaw.
Such term does not include revenues received by a broker or dealer
in connection with the distribution of shares of a registered open
end investment company or unit investment trust or revenues derived
by a broker or dealer from the sale of variable annuities or from
the conduct of the business of insurance.
(10) Liquidation proceeding
The term ``liquidation proceeding'' means any proceeding for the
liquidation of a debtor under this chapter in which a trustee has
been appointed under section 78eee(b)(3) of this title.
(11) Net equity
The term ``net equity'' means the dollar amount of the account
or accounts of a customer, to be determined by--
(A) 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, all securities positions of such
customer (other than customer name securities reclaimed by such
customer); minus
(B) any indebtedness of such customer to the debtor on the
filing date; plus
(C) 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
78fff-2(a) of this title).
In determining net equity under this paragraph, accounts held by a
customer in separate capacities shall be deemed to be accounts of
separate customers.
(12) Persons registered as brokers or dealers
The term ``persons registered as brokers or dealers'' includes
any person who is a member of a national securities exchange other
than a government securities broker or government securities dealer
registered under section 78o-5(a)(1)(A) of this title.
(13) Protective decree
The term ``protective decree'' means a decree, issued by a court
upon application of SIPC under section 78eee(a)(3) of this title,
that the customers of a member of SIPC are in need of the protection
provided under this chapter.
(14) Security
The term ``Security'' means any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, any collateral trust
certificate, preorganization certificate or subscription,
transferable share, voting trust certificate, certificate of
deposit, certificate of deposit for a security, or any security
future as that term is defined in section 78c(a)(55)(A) of this
title, any investment contract or certificate of interest or
participation in any profit-sharing agreement or in any oil, gas, or
mineral royalty or lease (if such investment contract or interest is
the subject of a registration statement with the Commission pursuant
to the provisions of the Securities Act of 1933 [15 U.S.C. 77a et
seq.]), any put, call, straddle, option, or privilege on any
security, or group or index of securities (including any interest
therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange
relating to foreign currency, any certificate of interest or
participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase or
sell any of the foregoing, and any other instrument commonly known
as a security. Except as specifically provided above, the term
``security'' does not include any currency, or any commodity or
related contract or futures contract, or any warrant or right to
subscribe to or purchase or sell any of the foregoing.
(Pub. L. 91-598, Sec. 16, formerly Sec. 12, Dec. 30, 1970, 84 Stat.
1656; renumbered Sec. 16 and amended Pub. L. 95-283, Secs. 9, 15, May
21, 1978, 92 Stat. 260, 271; Pub. L. 95-598, title III, Sec. 308(o),
Nov. 6, 1978, 92 Stat. 2676; Pub. L. 97-303, Sec. 7, Oct. 13, 1982, 96
Stat. 1410; Pub. L. 100-181, title VIII, Sec. 802, Dec. 4, 1987, 101
Stat. 1265; Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec. 203(d)(1)],
Dec. 21, 2000, 114 Stat. 2763, 2763A-424.)
References in Text
This chapter, referred to in provision preceding par. (1), and in
pars. (10) and (13), 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 Bankruptcy Act, referred to in provision preceding par. (1), is
act July 1, 1898, ch. 541, 30 Stat. 544, as amended, which was
classified generally to former Title 11, Bankruptcy. The Act was
repealed effective Oct. 1, 1979, by Pub. L. 95-598, Secs. 401(a),
402(a), Nov. 6, 1978, 92 Stat. 2682, section 101 of which enacted
revised Title 11.
The Securities Act of 1933, referred to in par. (14), is act May 27,
1933, ch. 38, title I, 48 Stat. 74, as amended, which is classified
generally to subchapter I (Sec. 77a et seq.) of chapter 2A of this
title. For complete classification of this Act to the Code, see section
77a of this title and Tables.
Amendments
2000--Par. (14). Pub. L. 106-554 inserted ``or any security future
as that term is defined in section 78c(a)(55)(A) of this title,'' after
``certificate of deposit for a security,''.
1987--Par. (12). Pub. L. 100-181 inserted ``other than a government
securities broker or government securities dealer registered under
section 78o-5(a)(1)(A) of this title''.
1982--Par. (14). Pub. L. 97-303 inserted ``any put, call, straddle,
option, or privilege on any security, or group or index of securities
(including any interest therein or based on the value thereof), or any
put, call, straddle, option, or privilege entered into on a national
securities exchange relating to foreign currency,'' after ``the
Securities Act of 1933 [15 U.S.C.A. Sec. 77a et seq.]),'' and
substituted ``Except as specifically provided above, the term `security'
does not include'' for ``The term `security' does not include''.
1978--Par. (1). Pub. L. 95-598, Sec. 308(o)(1), (3), struck out par.
(1) definition of ``Bankruptcy Act'' and redesignated par. (2) as (1).
Pars. (2) to (6). Pub. L. 95-598, Sec. 309(o)(3), redesignated pars.
(3) to (7) as (2) to (6), respectively. Former par. (2) redesignated
(1).
Par. (7). Pub. L. 95-598, Sec. 308(o)(2), (3), redesignated par. (8)
as (7) and substituted in subpar. (A) ``if a petition under title 11
concerning the debtor was filed before such date'' for ``if a petition
was filed before such date by or against the debtor under the Bankruptcy
Act, or under chapter X or XI of such Act, as now in effect or as
amended from time to time''. Former par. (7) redesignated (6).
Pars. (8) to (15). Pub. L. 95-598, Sec. 308(o)(3), redesignated
pars. (9) to (15) as (8) to (14), respectively. Former par. (8)
redesignated (7).
Pub. L. 95-283 in introductory text inserted requirement for
applicability of terms to a liquidation proceeding involving the
Bankruptcy Act, in par. (1) heading substituted ``Bankruptcy Act'' for
``Self-regulatory organization'', and in text substituted provisions
defining such terms, in par. (2) heading substituted ``Commission'' for
``Financial responsibility rules'', and in text substituted provisions
defining such terms, in par. (3) heading substituted ``Customer'' for
``Examining authority'', and in text substituted provisions defining
such terms, and added pars. (4) to (15).
Effective Date of 1978 Amendment
Amendment of section by Pub. L. 95-598 effective Oct. 1, 1979, see
section 402(a) of Pub. L. 95-598, set out as an Effective Date note
preceding section 101 of Title 11, Bankruptcy.
Section Referred to in Other Sections
This section is referred to in sections 78ccc, 78fff, 78fff-4 of
this title.
