The orderly liquidation of a covered broker-dealer must be accomplished in a manner that ensures that customers of the covered broker-dealer receive payments or property that is at least as beneficial to them as what would have been the case had the covered broker-dealer been liquidated under the Securities Investor Protection Act of 1970 (SIPA). The rule also indicates how the relevant provisions of SIPA can be incorporated into a Title II proceeding. Upon the appointment of the FDIC as receiver, the FDIC would appoint SIPC as trustee for the broker-dealer. In this capacity, SIPC would determine and satisfy customer claims under the same rules and with the same methods as it would have in a proceeding under SIPA. The treatment of the covered broker-dealer’s qualified financial contracts would be governed in accordance with Title II.

In addition, the final rule describes the claims process applicable to customers and other creditors of a covered broker-dealer. The FDIC’s powers as receiver with respect to the transfer of assets of a covered broker-dealer to a bridge broker-dealer are clarified in the rule changes as well.

The final rule is nearly identical to the proposed rule that was published in the Federal Register in 2016. This change becomes effective 60 days after publication in the Federal Register. To contact the SEC on this matter, call the Office of Public Affairs at (202) 551-4120. To contact the FDIC, call David Barr at (703) 622-4790.

Sources:

Agencies Adopt Final Rule on the Orderly Liquidation of Covered Broker-Dealers under Title II of the Dodd-Frank Act (www.sec.gov)

Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (www.sec.gov)