January 19, 2021

Volume XI, Number 19


January 18, 2021

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Securities and Exchange Commission (SEC) This Week

SEC and FDIC Adopt Final Rule on the Orderly Liquidation of Covered Broker-Dealers Under Dodd-Frank

On July 24, the Securities and Exchange Commission announced that the SEC and the Federal Deposit Insurance Corporation (FDIC) have adopted a final rule clarifying and implementing provisions relating to the orderly liquidation of certain brokers or dealers (covered broker-dealers) in the event the FDIC is appointed receiver under Title II of the Dodd–Frank Wall Street Reform and Consumer Protection Act.

The liquidation of a covered broker-dealer must be accomplished in a manner that ensures that customers of such covered broker-dealer receive payments at least as beneficial to them as they would have received had the liquidation occurred under the Securities Investor Protection Act of 1970 (SIPA). The final rule clarifies how the relevant provisions of SIPA would be incorporated into a Title II proceeding. Specifically, upon the appointment of the FDIC as receiver, the FDIC would appoint Securities Investor Protection Corporation (SIPC) to act as trustee for the broker-dealer. SIPC would determine and satisfy customer claims in the same manner as it would in a proceeding under SIPA.

The final rule will be effective 60 days after publication in the Federal Register.

The SEC press release is available here.

SEC Announces Creation of the Event and Emerging Risk Examination Team in the Office of Compliance Inspections and Examinations

On July 28, the Securities and Exchange Commission announced the creation of the Event and Emerging Risks Examination Team (EERT) in the Office of Compliance Inspections and Examinations (OCIE). The EERT will engage with financial firms about emerging threats and current market events so that it can provide expertise and resources to the SEC’s regional offices when critical matters, such as exchange outages, liquidity events, or cybersecurity or other operational resiliency concerns, arise. The EERT, through examinations and other engagement, also will ensure that firms are better prepared to address such threats and risks.

The SEC press release is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 213



About this Author

Jack West Financial Attorney Katten

Jack West is an associate in the Financial Markets and Funds practice.

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...

Susan Light, Katten Law Firm, Finance Law Attorney, New York

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.