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Transcription

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2 CIP / ISBN Ⅰ. Ⅱ. Ⅲ. - - Ⅳ. D CIP ISBN /D http / /cbs. pku. edu. cn pl@pup. pku. edu. cn

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10 Abstr act In the current brokerage firm crisis in China the securities customer property risk becomes outstanding. Basically this concept relates to the risk where the customer securities and / or money entrusted with a brokerage firm or other custodians are partly or wholly unable to be taken back due to the latter s bankruptcy. From the perspective of investor protection this book tries to make a systematic analysis of some significant legal issues therein. This book is divided into five chapters. Chapter One generally discusses the securities holding system with the purpose of providing a technical background for the topic at bar because different holding and custody arrangements lead to different rights and obligations between customers and custodians and in turn impact the range and extent of the customer property risk. By comparison with other countries this chapter finds that China has adopted a direct holding and one-tier custody system and rejects the socalled central registration two-tier custody practice. Chapter Two explores the content of the customer property risk namely the customer securities risk and the customer money risk. The former mainly lies with the indirect holding system and as reaction some countries have specifically defined the legal nature of the interests in indirectly held securities. In China the direct holding system reduces the customer securities risk and the major risk is that of the customer money or the customer settlement fund. After detailed analysis of the ownership of the customer settlement fund the author suggests that a trust arrangement be introduced to ensure the independence and safety of the customer money. Chapters Three to Five deal with three separate but related issues in turn. Chapter Three discusses the control of customer property risk in the daily operation of custodians by imposing net capital requirements and customer property separation obligations. The author especially delves into the current customer

11 4 money custody mechanism in China including the so-called independent custody requirement concluding that without the introduction of trust arrangement the misappropriation problem cannot be solved thoroughly. Chapter Four deals with the treatment of the customers claims based on their securities and money under custody in the case of the custodian s bankruptcy. In China this issue presently mainly concerns the liquidation of failed brokerage firms and the distribution of the proceeds. This chapter discusses some special procedure and methods employed in such liquidation proceeding as are different from the general liquidation proceedings as well as its linkage to and coordination with the investor compensation plans. As a logical continuation of Chapter Four Chapter Five discusses the systematic compensation to securities customers when their claims cannot be fully satisfied out of the liquidation proceeds. The author analyzes the source administration operation scope and ceiling of the securities investor compensation fund with the suggestion that the powers and priorities of the fund management entity in the liquidation proceedings should be specified in the proposed Bankruptcy Act or its implementing rules. Key Words Customer Property Risk Custody Trust Investor Protection

12 CONTENTS

13 2 CONTENTS

14 safekeeping administration custody custodian customer /client / See Joanna Benjamin The Law of Global Custody 2d. ed. Butterworths at See also Steven L. Schwarcz Intermediary Risk in a Global Economy 50 Duke L. J

15 2 bailee indirect holding system immediate intermediary Christophe Bernasconi The Law Applicable to Dispositions of Securities Held Through Indirect Holding Systems 2000 Report of the First Secretary of the Permanent Bureau Hague Conference on Private International Law to the Working Group of January 200 hereinafter referred to as Bernasconi Report at See Ibid.

16 3 bailment physical possession / bailee / bailor intangibles / liquidity / proprietory position /

17 4 Central Counterparty CCP failure Securities Investors Protection Act SIPA Securities Investors Protection Corporation SIPC /

18 A

19 IOSCO http / /www. schinda. com/lan /train /information /info/49. htm

20 7 La Porta Lopez-De-Silanes Shleifer and Vishny LLSV 49 GDP LLSV 2 Rafael La Porta Florencio Lopez-de-Silanes Andrei Shleifer & Robert W. Vishny Legal Determinants of External Finance 52 J. Fin WTO

21 Steven Schwarcz Charles Mooney 2 Schwarcz Mooney negotiability Steven L. Schwarcz Intermediary Risk in a Global Economy 50 Duke L. J Charles W. Mooney Jr. Beyond Negotiability A New Model for Transfer and Pledge of Interests in Securities Controlled by Intermediaries 2 Cardozo L. Rev

22 9 2 test and error

23 0

24 holding Central Securities Depository CSD immobilization dematerialization custody

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26 back office crisis 4 CSD CSD http / /eapp0. sfc. hk /apps /som/scriplesssecmkt. nsf/chi /Main http / /eapp0. sfc. hk /apps /cc /RegulatoryHandbook. nsf/chi /GenerateHTMLCL openagent paperwork crisis

27 4 CREST 2 CREST 2 CREST 996 CREST See Benjamin The Law of Global Custody at 26 n. 2. CREST CREST recognized clearing house RCH Financial Service Authority CREST 995 Uncertificated Securities Regulations 995 SI 995 / Uncertificated Securities Regulation 200 SI 200 / CREST CREST CREST 995

28 5 995 CREST CREST CREST equitable ownership Depository Trust Corporation DTC 2 Fast Automated Securities Transfer Program FAST 3 CREST 200 CREST CREST CREST CREST 4 CREST operator register CREST duplicated record CREST CREST See Crest Regulation See also HM Treasury Consultation Document on the Draft Uncertificated Securities Regulations January 995 p DTC CSD National Securities Clearing Corporation NSCC 999 DTC NSCC Depository Trust & Clearing Corporation DTCC DTCC CREST CREST CREST written instrument of transfer See Companies Act 985 s

29 post-trade trade confirmation trade matching trade comparison 4 clearance CREST transfer conversion 3 CREST Regulation 3 32 conversion CREST Company Act 985 s See CREST Regulation

30 7 settlement delivery payment 2 / International Central Securities Depository ICSD 3 CCP contract novation 4 CCP CCP G Cedel 970 Centrale de Livraison de Valeur Mobilieres 2000 DBC Clearstream International Euroclear SICOVAM Euroclear France CIK TradeGo Necigef Eruoclear Netherland CREST http / /www. otc. org. tw/prints /doc /90% B4% C /90% A5D% C3D. doc CCP CCP CCP

31 8 CCP 2. actual investor 3 / direct holding of securities CCP 2 3 CCP 4 CCP 5 6 CCP 7 CCP See DTCC Central Counterparties Development Cooperation and Consolidation 2000 Part DTCC supra Appendix A 8 3 beneficial owner Black s Law Dictionary 2d pocket edition at SEC 4b-2 Any person who has or shares pursuant to an instrument agreement or otherwise power to vote or to direct the voting of a security SEC Rule 4b-2 a.

32 failure in delivery 2 CSD CSD CSD CSD book-entry form 3 CSD CSD / CSD CSD indirect holding of securities See Joel Seligman The Transformation of Wall Street A History of the Securities and Exchange Commission and Modern Corporate Finance 2d ed. Northeastern University Press at See Robert Hamilton Corporations Including Partnerships and Limited Liability Companies 7th ed. West Group at G30 9

33 20 CSD ICSD CSD CSD CSD CSD tiered holding system CSD CSD CSD

34 2 CSD CSD omnibus fungible CSD Australia Investor 50 Illinois Inc. 500 DTC Newark NJ Registrar DTC Cede & Co. 500 CSD immobilization CSD dematerialization 2 CSD non-fungible traceable 3 See Bernasconi report at 4 6.

35 22 50 ICSD Omnibus Customers Accounts 20 ICSD California Sub-custodian ICSD 250 DTC 300 www. chinaclear. com. cn /infos /2004 /0 / shtml

36 23 unallocated fungible or pooled ICSD ICSD ISCD. CSD CSD 2 nominee registration street name registration CSD 2 G

37 corporate investor fiduciary 2 margin transaction 3 CSD CSD CSD CSD CSD DTC Cede & Co. 83% 9% 72% 4 CSD recordholder & Co. See SEC Final Report on the Practice of Recording the Ownership of Securities in the Records of the Issuer in Other than the Name of the Beneficial Owner of Such Securities December hereinafter The Street Name Study n See Ibid Part. A. 3 See Ibid. n See ALT & NCCUSL Uniform Commercial Code Official Text 2000 Revised Article Revisioin Prefatory Note at See Hamilton Corporations Including Partnerships and Limited Liability Companies at 636.

38 25 SEC CSD CSD CSD 2. / SEC 965 voting trustee 973 7% 68% SEC See SEC Transfer Agents Operating Direct Registration System Release No CSD See Hamilton Corporations Including Partnerships and Limited Liability Companies at See Hamilton Corporations Including Partnerships and Limited Liability Companies at 639.

39 26 SEC 4A 4a-3 4b- 4b-2 4b direct registration system DRS DRS 2 3 DTC DTC 4 DRS See Hamilton Corporations Including Partnerships and Limited Liability Companies at DRS DRS See SEC Transfer Agents Operating Direct Registration System Release No DRS 4 See SEC Transfer Agents Operating Direct Registration System Release No

40 27 DTC DRS DRS CSD CSD 2 CSD CSD CSD SEC DTC DRS Profile Modification System DRS DTC See SEC The SEC Speaks in 2000 PLI Order No. B0-00GF March 2000 in Hamilton Corporations Including Partnerships and Limited Liability Companies at http / /www. hkex. com. hk /consul /conclusion /HKEx-Con C. pdf CREST pooled accounts designated accounts sponsored membership CREST CREST CREST CREST See Benjamin The Law of Global Custody at CREST

41 28 33 CSD corporate action

42 A A

43 B QFII B B B B A B B 7 B A

44 3 QFII A A QFII A CSD B 23 B

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46 http / /0. stock888. net /0022 / shtml http / /www. chinaclear. com. cn /columndisplay. do ismore = &columnid = CSD

47 34 CSD CSD 2 2 http / /www. tscd. com. tw/index_a02pub. htm http / /www. tscd. com. tw/index_07qa. htm

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49 36 depository custody CSD CSD CSD 3 CSD http / /www. chinaclear. com. cn /columndisplay. do ismore = &columnid =

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52 39 http / /www. shezfy. com/newsdetail. asp id =

53 bail-

54 4 ment physical possession bailor bailee 2 3 / certainty of subject matter house holding client holding equivalent re- possession property physical control legal possession constructive possession See Benjamin The Law of Global Custody at. 2 N. E. Palmer Liability of Bankers as Custodians of Client Property Palmer on Bailment 2d. ed the essence of bailment is possession... without possession there can be no relationship of bailor and bailee... it is improbable that the courts will develop the supposition that there may be a bailment of an intangible thing

55 42 delivery allocation problem Hunter v. Moss 4 Moss declaration of trust Hunter 5% Moss See Benjamin The Law of Global Custody at R. M. Goode Ownership and Obligation in Commercial Transactions LQR 03 July at See for example Robert Ryan Taking Security Over Investment Portfolios Held in Global Custody 0 JIBL WLR Ibid at See Benjamin The Law of Global Custody at 3.

56 43 co-ownership arrangement tenants in common 994 securities entitlement. 2 See Benjamin The Law of Global Custody at tenancy in common 2 See generally Bernasconi Report at 9 22.

57 44 actual pools of securities nominal pools of securities legally traceable to constructive possession or record ownership

58 right of revendication place where the entry is made lex situs Luxembourg Grand-Ducal Decree of 7 February Hal S. Scott & Philip A. Wellons International Finance 8th ed. Foundation Press at

59 46 place of the relevant intermediary approach PRI- MA Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary 2. Uniform Commercial Code UCC Article 8 investment securities possession and delivery of physical certificates See Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary Article 4 5. See also Bernasconi Report Part Three

60 Part a package of rights 2 securities intermediary entitlement holder See generally Prefatory Note to the 994 Revision of U. C. C. Article See Ibid. at See U. C. C a custodial function 2 3 See James Rogers Policy Perspectives on Revised U. C. C. Article 8 43 UCLA L. Rev

61 security entitlement a Security entitlement means the rights and property interest of an entitlement holder with respect to a financial asset specified in Part 5. U. C. C a See U. C. C a Rogers 994 See Rogers Policy Perspectives on Revised U. C. C. Article

62 c bona fide purchaser adverse claim b a a pro rata property interest 978 protected purchaser bona fide good faith See Rogers Policy Perspectives on Revised U. C. C. Article 8 at

63 See U. C. C cmt U. C. C b c 994. U. C. C c 994.

64 a d e 2 recover a b c See Rogers Policy Perspectives on Revised U. C. C. Article e

65 control 8-06 a c 2 d b e 8-5 control priority rule See Rogers Policy Perspectives on Revised U. C. C. Article See Prefatory Note to the 994 Revision of U. C. C. Article 8.

66 53 b b c 3. lex rei sitae 4 look through approach U. C. C. hard pledge See Rogers Policy Perspectives on Revised U. C. C. Article b e See U. C. C. 8-5 cmt.. 3 See Russell A. Hakes UCC Article 8 Will the Indirect Holding of Securities Survive the Light of Day 35 Loy. L. A. L. Rev See Bernasconi Report at 3.

67 54 2. PRIMA place of the relevant intermediary approach PRIMA CSD See Bernasconi Report at 29.

68 55 PRIMA PRIMA 2 PRIMA 3 PRIMA 4 PRIMA 5 PRIMA PRIMA PRIMA PRIMA PRIMA 8-0 b Collateral Directive See DE VAUPLANE / MOUY La réforme du nantissement des titres dématérialisés Banque & droit n p. 3 in Bernasconi Report at Directive of the European Parliament and of the Council on financial collateral arrangements 2002 /47 /EC

69 Directive on Settlement Finality PRIMA 3. PRIMA Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary PRI- MA 3 proprietary aspects certain rights PRIMA PRIMA Directive of the European Parliament and of the Council on Settlement Finality in Payment and Securities Settlement Systems 998 /26 /EC 9 2 PRIMA 2 http / /www. isda. org/c_and_a /eurocoldir. html

70 57 disposition 2 collateral transaction title transfer mechanism hard pledge h See Prel. Doc. No. 6 of November 200 Brief Explanation at http / /hcch. e-vision. nl /index_ en. php act = conventions. publications&dtid = 35&cid = 72 last visited See Prel. Doc. No. 3 at 4 supra. 3 / See Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary Article a e g.

71 PRIMA 2 office 2 3 See Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary Article 4 6.

72 59 4 PRIMA 2 A B C See Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary status table at http / /hcch. e-vision. nl /index_en. php act = conventions. status&cid = 72 last visited http / /www. zqlawyer. com/cases /stock% 20deal /6. htm

73 repurchase agreement repo http / /www. zhiyin. com. cn /zy/ ca937. htm

74 6 short sale / central counterparty CCP

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76 http / /www. chinaclear. com. cn /infos /2004 / / shtml

77 http / /www. chinaclear. com. cn /columndisplay. do ismore = &columnid =

78 65 See Benjamin The Law of Global Custody at 20.

79 ER Space Investment Ltd v Canadian Imperial Bank of Commerce Trust Co Bahama Ltd All See Benjamin The Law of Global Custody at

80 See H. R. Rep. No st Cong. 2d Sess in Louis Loss & Joel Seligman Securities Regulation Vol. VII 3rd ed. Little Brown & Company

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83 legal ownership equity ownership or beneficial ownership

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87 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉 獉

88 http / /finance. tom. com/008 /00 / html

89 /3 /

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94 IOSCO 998

95 82 SEC 6. 67% 5 2% 8% SEC b

96 83 20 SEC 2 SEC c 3 8 b SEC SEC SEC 942 5c3- SEC SEC 8 3 / 8 b 20 / SEC 944 net 2000% 2 See Loss & Seligman Securities Regulation Vol. VII See Sec. Ex. Act Rel SEC 965 SEC 5000 / SEC / / See Sec. Ex. Act Rel SEC 25

97 84 capital aggregate indebtedness 5c3- SEC SEC SEC 5c subordinated loan secured demand note % 34% 25% 0% 70% SEC SEC SEC customer-related business See former rule 5c3- b. SEC See Sec. Ex. Act Rel See Loss & Seligman Securities Regulation Vol. VII See SEC Study of Unsafe and Unsound Practices of Brokers and Dealers 97.

98 85 2. early warning level aggregate indebtedness net capital net worth GAAP 5 haircut See Loss & Seligman Securities Regulation Vol. VII Rule 5c3- c. Rule 5c3- c i. See Sec. Ex. Act Rel Rule 5c3- c 2 iv.

99 % 975 5% 992 5% undue concentration 0% 50% 5% 2 subordination agreements D 70% 3 4 lock-in clause 5 2 See Michael Jamroz The Net Capital Rule 47 Bus. Law Rule 5c3- c 2 vi M. 3 Rule 5c3- d. 3 d revolving subordinated loan agreement See Exhibit D to Rule 5c3- subparagraph b c 5. See subparagraph b 7. SEC NASD See Rule 5c3- c 2. 5 Exhibit D subparagraph b 8.

100 87 alternative method customer-related receivables 5c % 25 4 leverage 5 3% Rule 5c3- a i a 2 i. 2 See Touche Ross & Co. v. Redington 442 U. S n c3-3 A Reserve Formula aggregate debit items See Rules 5c3-3a 0 3. customer-related liabilities free credit balances See Sec. Ex. Act Rel Rule 5c3- a ii % 982 2% 5 50% See SEC Study on the Financing and Regulation of Capital Needs of the Securities Industry vi 985.

101 88 0 5% 990 Drexel Drexel DBL Drexel DBL DBL SEC SEC Drexel DBL 2 Drexel SEC 5c3- e 5% SEC 3 SEC 99 5c3- e Rule 5c3- e 2 v vi. See Sec. Ex. Act Rel proposing amendments to Rule 5c3- e. Ibid.

102 89 30% 2 SEC 20% 2 SEC % SEC SEC % SEC SEC = % Rule 5c3- e 2 i 2 iii 3 i

103 % 20% % 9 3 0% = % 95% 90% 90% 90% 80% 90% 2 70% 2 3

104 9 3 50% 3 0% 60% 50% 40% % 50% 2 85% 90% % ST PT 60% 50% 30% 20% 5% 5% 60% 3 50%

105 92 50% 0% http / / news. jrj. com. cn / news / / html http / /finance. sina. com. cn /t / / shtml

106 !

107 94! SEC 5c3-3 promptly 5c3-3 excess margin securities 40% fully paid securities See Bloomenthal & Salcito Customer Protection from Brokerage Failures The Securities Investor Protection Corporation and SEC 54 U. Colo. L. Rev Rule 5c3-3 a See Bloomenthal & Salcito supra at Rule 5c3-3 d.

108 95 in good faith physical possession control c 2 omnibus account A B A 3 SEC Rule 5c3-3 b

109 96 7a-3 physically examine and count 7 T

110 b 2 hypothecation of any securities carried for the account of any customer commingling c b SEC 8c-

111 98 bona fide customer 3 aggregate indebtedness SEC 8 5 c 2 SEC SEC940 8c- 5c2-2 appropriate 3 2 a a 2 a 3 a 3 3 Rule 8c- a 3. 2 Rule 8c- b 2. 3 General Business Law See Loss & Seligman Securities Regulation Vol. VII

112 99 a 2 a 3 SEC 966 g 2 a a 2 f Rule 8c- d. 2 See Sec. Ex. Act Rel

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114 SEC 200

115 ING

116 03 Financial Service Authority FSA Client Money Rules CMR designated investment business 2 safekeeping and administering of investments FSMA CMR approved bank 3 4 CMR statutory trust CMR CMR CMR Financial Services and Markets Act 2000 FSMA FSMA Conduct of Business Rules CoB FSMA Regulated Activities Order 200 FSMA See Benjamin The Law of Global Custody at 2 3. FSMA regulated entity 3 See FSA Glossary Approved Bank. 4 5 See Benjamin The Law of Global Custody at

117 04 2. T Central Deposit Insurance Corporation CDIC Korea Securities Finance Corporation http / /www. digitalfortune. com. cn /cn /issues /2004 /4 / text /t_4_6. asp

118 SFC 2002 authorized financial institution licensed corporation regulated activities associated entity controlling relationship 5 http / /translate. justice. gov. hk /han3 /2 / / /0 /0 / /0 /www. legislation. gov. hk /blis _ export. nsf/chome. htm deposit-taking company

119 06 SEC SEC 5c3-3 Special Reserve Bank Account for the Exclusive Benefit of Customers 5c3-3 A Formula for Determination of Reserve Requirement 3 9 credit items 0 3 debit items 2 8 http / /www. chinaclear. com. cn /columndisplay. do ismore = &columnid = See Exhibit A to Rule 5c3-3.

120 07 qualified securities 2 3 SEC 4 5 SEC margin customer Rule 5c3-3 e % See Rule 5c3-3 e 3. 2 See Rule 5c3-3 a 6. 3 Rule 5c3-3 g. 4 Rule 5c3-3 i. Joseph J. Balint 47 SEC Rule 5c3-3 e 2.

121 08 non-operational account 2 / / 3 free credit balances 4 5c c3-2 5c3-3 5c3-2 5c3-3 Sec. Ex. Act Rel See Loss & Seligman Securities Regulation Vol. VII 37 n Rule 5c3-3 f. 4 The term free credit balances shall mean liabilities of a broker or dealer to customers which are subject to immediate cash payment to customers on demand whether resulting from sales of securities dividends interest deposits or otherwise. See Rule 5c3-3 a 8.

122 c c

123 SEC 5c c3-3 = > 0 = >

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125 CTS

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131 bad boy clause

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135 In re Slattery & Co. 294 F d Cir. 923.

136 SIPA SIPC SIPA SIPA 3 SIPA SIPA See Bankruptcy Code USC Title SIPA SI- PA SIPA See Michael E. Don & Josephine Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers 2 Cardozo L. Rev

137 24 SIPC 2 SIPC protective decree SIPC SIPC 4 stay petition SIPA SIPC SIPC SIPC SIPC SIPC v. Barbour 42 U. S SIPC SEC SIPC SIPC See SIPA 5 a. 3 SIPA 5 a 3. 4 SIPA 5 a 4. 5 SIPA 5 b 2 B i.

138 25 2 SIPA status quo SIPC 2 setoff SIPC securities contracts SIPA 3 SIPC SIPC SIPC 4 SIPC 5 SIPC trustee attorney 6 SIPA 5 b 2 A i. 2 See Bankruptcy Code 362 a. 3 See Ibid See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers at SIPA 5 b. 6 SIPA 5 b 3.

139 26 SIPA SIPA 2 SIPC SEC SIPA SIPA SIPA A customer name securities B customer property net equity claims 2 3 SIPC SIPA 5 b 3 5 b 6 A. subordinated lender SIPC SIPC SIPC See H. R. Rep. No th Cong. st Sess SIPC SIPC SIPC See 5 b 6 A. 2 SIPA 5 b 4. SIPA 3 SIPA 5 c d. 4 SIPA 8 a 2.

140 27 4. executory contract % 3 5% 4 SIPA 6 a. 2 Bankruptcy Code 365 d. 3 Ibid See Bankruptcy Code 0 3.

141 in separate capacities SIPC 745 SIPC SIPA 6 SIPA qualifying trust account 7 SIPA SIPC Rules 0 a 0 b 02 a 02 b

142 29 / SIPC Rules

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146 33 / /

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148 SIPA

149 36 SIPA. 60 e SIPA 60 e 938 SI- PA 60 e cash customer specifically identifiable property solvent physically set a- side 2 single and separate fund single and separate SIPA 60 e See SEC v. Aberdeen Sec. Co. 480 F. 2d d Cir. cert. denied 44 U. S See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers at 526.

150 37 creditors 60 e SIPA 2. SIPA SIPA 60 e SIPA SIPA 60 e SIPA 60 e 2 SIPA 60 e SIPA 60 e SIPA individually or in bulk 2 SIPA See Mardick v. Stover 392 F. 2d th Cir SIPA 6 c 2 A iii 970.

151 38 3 SEC 60 e SIPA SIPA 60 e SEC 5c3-3 one-box system SIPA 973 5c SIPA 970 5c3-3 margin customer 2 3 SIPA 6 c 2 C 970. See Rule 5c3-3 j

152 39 3. SIPA SIPA customer name securities customer property SIPA general estate 2 SIPA 3 SIPC See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers at SIPA See H. R. Rep. No supra. See SIPA 8 c 2. 4 See SIPA 6 f 970 SIPA 9 a.

153 40 net equity claim 2 net equity SIPC 50 0 SIPC SIPC 3 2 SIPA SIPA 6 4. SIPA 8 c. SIPA 9 a.

154 4 SIPA SIPA SIPC SIPC 4 SIPC SIPA SIPC H. R. Rep. No supra. SIPA 8 d. See H. R. Rep. No supra. SIPA 8 f.

155 42 SIPA See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers at 546.

156

157

158 45 2 2

159 46 2 estoppel negotiable securities entitlement See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers n See U. C. C. 8-5 b. 2 5

160 47 2 CCP

161 e settlement payment See SIPA 8 c 3 Bankruptcy Code 749 a

162 49

163 externality /

164 back office crisis margin securities See Robert Hamilton Corporations Including Partnerships and Limited Liability Companies 7th ed. West Group at H. R. Rep. No st Cong. 2d Sess

165 52 SIPA bail out SIPC 2 SEC 3 SEC 4 SIPC 2 SIPC FSMA Financial Services Compensation Scheme FSCS See supra. SIPC FDIC SIPC See Thomas W. Joo Who Watch the Watchers The Securities Investors Protection Act the Investor Confidence and the Subsidization of Failure 72 S. Cal. L. Rev See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and Their Impact on Securities Transfers at 53.

166 53 2. Canadian Investor Protection Fund CIPF 969 National Contingency Fund 990 CIPF CIPF 2 http / /www. angle. com. tw/lawtalk /lawg-6. pdf

167 54. 2 SIPC % SIPC % % % SIPC

168 55 SIPC 2003 SIPC 2. 5 trading right / 5 / levy % SIPA SEC SIPC See SIPC Annual Report 2003 available at http / /www. sipc. org/who/annual. cfm last visited http / /www. legco. gov. hk / yr00-0 /chinese /bc /bc04 /papers /bc04-784c-scan. pdf SIPA 4 g h. 5

169 % 0% 2 3 0%

170 % 0. 72% %

171 % % 5%

172 59 SIPC 970 SIPA SIPC b 2003 SIPC SIPA SIPC SIPC SEC SIPC SIPC SEC SEC SIPC SIPC SIPC SIPC See SIPC Annual Report See SIPA 3 a A 3 a 2 B 3 c 3 3 e 3 f.

173 National Guarantee Fund NGF Securities Exchange Guarantee Corporation SEGC http / /www. sfc. hk /sfc /doc /TC/research /research /extpaper03% 20 chi. pdf

174

175 62 9 SIPC SIPC See SIPC Annual Report 2003.

176 63 30% 0%

177 64. SIPA term of art 2 SIPA See SIPC v. Wise In re Stalvey & Assocs. 750 F. 2d th Cir SIPA 6 2.

178 65 fiduciary duty 2. v SIPA See See H. R. Rep. No th Cong. 2d Sess

179 66 3. SIPA SIPC 2 5% 3 5% 4 SIPC SIPC 2 SIPC SIPA 9 a

180

181 / v. / SIPA

182 Their Impact on Securities Transfers 2 3 See Don & Wang Stockbroker Liquidations Under the Securities Investor Protection Act and at

183 SIPC

184 7 SIPC % % %

185 72 SIPC / 90% 0% 6 7 0%

186 73 /

187

188 75

189 /

190 E. E

191 G Benjamin Joanna Interests in Securities A Proprietary Law Analysis of the International Securities Markets Oxford University Press Benjamin Joanna The Law of Global Custody 2d ed. Butterworths Blume Marshall E. et al. Revolution on Wall Street The Rise and Decline of the NYSE W. W. Norton Bogert George T. Trust 6th ed. West Group Clarke William M. How the City of London Works 3rd ed. Waterlow Publishers Dale Richard Risk and Regulation in Global Securities Markets John Wiley & Sons 7. Dietl Helmut M. Capital Markets and Corporate Governance in Japan Germany and The United States Routledge Fisher Janathan & Bewsey Jane The Law of Investor Protection Sweet & Maxwell 9. Frankel Tamar & Kirsch Clifford E. Investment Management Regulation Carolina Academic Press Franks Julian & Mayer Colin Risk Regulation and Investor Protection Gillen Mark Securities Regulation in Canada 2d ed. Carswell Legal Publishings 2. Gilson Ronald J. & Black Bernard S. Some of the Essentials of Finance and Investment Foundation Press Goldberg Stuart C. Fraudulent Broker-Dealer Practices American Institute for Securities Regulation 978.

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195 BBS Helmut Sohmen

196 83 John Attanasio Sohmen Jane Winn Gregory Crespi Marc Steinberg Joseph Norton Norman Miller