On February 17, 2016, the FDIC and the US Securities and Exchange Commission jointly issued a proposed rule to implement provisions for the orderly liquidation of covered brokers and dealers as required under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, Title II provides for federal receivership proceedings of qualifying financial companies, including covered broker-dealers, with the FDIC serving as receiver. The proposed rule defines a covered broker or dealer as any covered financial company that is registered with the SEC as a broker or dealer and is a member of the Securities Investor Protection Corporation. A covered financial company is generally one that is in danger of default and whose failure would have serious adverse effects on US financial stability, as determined by the Secretary of the Treasury. In the case of covered broker-dealer, the FDIC will serve as receiver, but the SIPC will serve as trustee.
Comments on the proposed rule must be received within 60 days after the date of publication in the Federal Register.
The full text of the proposed rule is available at: https://www.sec.gov/rules/proposed/2016/34-77157.pdf.
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