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56 Am. Bankr. L.J. 277 (1982)
Stockbroker Bankruptcy: The Role of the District Court and the Bankruptcy Court under the Securities Investor Protection Act

handle is hein.journals/ambank56 and id is 285 raw text is: Stockbroker Bankruptcy: The Role of the District Court and the Bankruptcy Court Under the Securities Investor Protection Act by Stephen P. Harbeck' I. INTRODUCTION A liquidation proceeding under the Securities Investor Protection Act of 1970 (SIPA)2 will always begin in a United States district court, but will always be removed to a bankruptcy court immediately after the initial stages of the case. This article will trace a proceeding under SIPA through the court system, with an emphasis on the major responsibilities of the district court and the bankruptcy court.3 It is necessary to preface such a procedural analysis with a brief background on stockbroker insolvency and to outline the principal provisions of SIPA. For purposes of completeness, this article touches upon the alternatives to a SIPA liquidation proceeding which would avoid the court system in whole or in part, or require the court to apply law other than SIPA. Past experience indicates that cases under SIPA arise most frequently in the major financial centers. However, stockbroker failure requiring the special protections of SIPA are a nationwide phenomenon.4 'Assistant General Counsel, Securities Investor Protection Corporation. The Securities Investor Protection Corporation, as a matter of policy, disclaims responsibility for any private publication by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of SIPC or of the author's colleagues upon the staff of SIPC. 215 U.S.C. §78aaa er seq. SIPA was amended by Pub. L. No. 95-283, 92 Stat. 249 (1978), Pub. L. No. 95-598, 92 Stat. 2549 (1978), and Pub. L. No. 96-433, 94 Stat. 1855 (1980). 3Probably no branch of bankruptcy administration presents more troublesome questions of law and administration than does the insolvency of a stock brokerage or investment concern. In re Slattery & Co., 294 F. 624, 626 (2d Cir. 1923). 4Proceedings under SIPA have arisen in 28 states and the territory of Guam. There have been 161 customer protection proceedings initiated under SIPA from January 1, 1971 through June 30, 1982.

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