The SEC and the FDIC finalized a rule governing the orderly liquidation of "covered broker-dealers" - large broker-dealers that may be subject to liquidation by the FDIC under the Dodd-Frank Act, rather than dissolution under the Securities Investor Protection Act (or "SIPA") (see also previous coverage).
Under the final rule, the SEC and the FDIC clarified:
- how the customer protections of SIPA will be integrated with the orderly liquidation provisions of Dodd-Frank;
- the role of the FDIC as a receiver and that of the Securities Investor Protection Corporation (or "SIPC") as trustee of a failed broker-dealer; and
- the administration of claims in an orderly liquidation process.
The final rule goes into effect 60 days after publication in the Federal Register.
Primary Sources
- SEC Press Release: Agencies Adopt Final Rule on the Orderly Liquidation of Covered Broker-Dealers under Title II of the Dodd-Frank Act
- SEC and FDIC Final Rule: Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act
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