CITE

    15 USC Sec. 78lll                                           01/08/2008

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2B091 - SECURITIES INVESTOR PROTECTION

HEAD

    Sec. 78lll. Definitions

STATUTE

      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.

SOURCE

    (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.