[Download] "Securities and Exchange Commission v. Packer" by United States Court of Appeals for the Second Circuit " Book PDF Kindle ePub Free
eBook details
- Title: Securities and Exchange Commission v. Packer
- Author : United States Court of Appeals for the Second Circuit
- Release Date : January 31, 1974
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 77 KB
Description
MANSFIELD, Circuit Judge: The failure of a business is an unhappy event for debtor and creditor alike. When the bankrupt is one of the pillars of the financial community, a brokerage firm long identified in the popular mind with stability and redoubtable finance the failure can produce a tremor in financial circles throughout the nation. The near collapse in 1969 of Hayden Stone and the rumors of impending failures of other brokerage houses cast a pall over Wall Street that was reminiscent of its never-to-be-forgotten ""Black Tuesday."" The industry naturally feared that the breakdown of these houses would be attended by a general decline in public confidence in the securities market. Congress soon became concerned for the state of the market and in particular for the plight of the many small investors who fell victim to the economic demise of their brokers. The upshot was a legislative effort to reinforce the flagging confidence in the securities market by providing an extra margin of protection for the small investor. The measure adopted was the Securities Investor Protection Act of 1970 (""SIPA""), 15 U.S.C. § 78aaa, et seq., which assures a minimum recovery to customers of insolvent brokerage houses from a quasi-public fund. The core provision of SIPA specifies that the Securities Investor Protection Corporation (""SIPC""), a nonprofit corporation consisting of all broker-dealers and members of national securities exchanges, shall advance to the trustee of a bankrupt house up to $50,000 for each customer claiming securities and $20,000 for each customer claiming cash from the brokerage house. 15 U.S.C. § 78fff(f) (1). The source of the SIPC fund is the general brokerage community, which pays tithes to SIPC to finance its work. 15 U.S.C. § 78ddd. Operation of this machinery is triggered by SIPC's determination that a broker is on the verge of insolvency, whereupon SIPC applies to the district court for an adjudication that the broker's customers are entitled to the protection of SIPA. The present case requires us to define some of the bounds of protection afforded by SIPA and, more particularly, to determine who its beneficiaries may be.