§78fff–3 SIPC advances

Summary

SIPC must give the trustee money so customers get paid quickly for their net equity claims, up to $500,000 for each customer. If the claim is for cash (not securities), the cash part is limited to the "standard maximum cash advance amount," which starts at $250,000. A person with separate accounts in different roles is treated as a different customer in each role. If the trustee buys securities to satisfy a claim, those securities are valued on the date the bankruptcy was filed when checking the dollar limits. SIPC will not advance money for claims by insiders or big owners or controllers of the firm. SIPC also will not advance money for claims by another broker, dealer, or bank unless those claims came from transactions for that broker’s or bank’s own customers; then each underlying customer is treated separately. SIPC must also advance money needed to carry out certain parts of the liquidation and to pay estate administration costs if the firm’s general assets are not enough. SIPC may advance money to pay or guarantee the firm’s debts to lenders, to back indemnities, or to buy securities when allowed under other parts of the law. The "standard maximum cash advance amount" is $250,000 and can be changed after December 31, 2010. Starting January 1, 2011 and every five years after that, the SIPC Board, with the Commission’s approval, will decide if an inflation adjustment is needed. If they raise it, they will multiply $250,000 by a ratio using the Personal Consumption Expenditures price index (the year before the decision versus the year before 2010), round the result down to the nearest $10,000, publish it by April 5, report it to Congress, and make the new amount effective the next January 1. The Board must consider the fund’s condition, economic conditions for SIPC members, possible problems, and other relevant factors.