H.R. 1987 (112th): Ponzi Scheme Investor Protection Act of 2011

Introduced:
May 25, 2011 (112th Congress, 2011–2013)
Sponsor:
Rep. Gary Ackerman [D-NY5]
Status:
Died (Referred to Committee)

The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.

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Status

This bill was introduced on May 25, 2011, in a previous session of Congress, but was not enacted.

Progress
Introduced May 25, 2011
Referred to Committee May 25, 2011
Cosponsors
8 cosponsors (8D) (show)
Committees

House Financial Services

The committee chair determines whether a bill will move past the committee stage.

Full Title

To amend the Securities Investor Protection Act of 1970 to provide insurance coverage for certain indirect investors caught in Ponzi schemes, and for other purposes.

Summary

No summaries available.

Text

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Last updated May 25, 2011.
12 pages

Primary Source

View on THOMAS (The Library of Congress)

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GovTrack’s Bill Summary

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

5/25/2011--Introduced.
Ponzi Scheme Investor Protection Act of 2011 - Amends the Securities Investor Protection Act of 1970 with respect to the duties of a trustee appointed for a Securities and Exchange Commission (SEC)-registered broker or dealer undergoing liquidation.
Instructs the trustee to take specified actions if the trustee determines that the debtor is a Ponzi scheme.
Establishes procedures for an indirect Ponzi scheme investor to file a claim.
Instructs the trustee to:
(1) coordinate with Ponzi scheme investors to ensure proper payments to indirect Ponzi scheme investors, and
(2) take specified actions to pay indirect Ponzi scheme investors.
Prescribes the maximum aggregate amount of all cash and securities that may be awarded to each indirect Ponzi scheme investor.
Prohibits the trustee of a Ponzi scheme from seeking to recover money and profits from any Ponzi scheme investor unless such investor was either:
(1) complicit in the Ponzi scheme, or
(2) registered, or should have been registered, with the SEC as an an investment adviser, broker, dealer, or other person with a fiduciary duty to its customers or investors.
Requires the Securities Investor Protection Corporation (SIPC) to:
(1) promulgate regulations to ensure that any required adjustment in the net equity of a Ponzi scheme investor is passed to the appropriate indirect Ponzi scheme investors,
(2) advance to the trustee any moneys required to pay claims and implement this Act, and
(3) promulgate regulations modifying SIPC Fund assessment levels to ensure they are adequate to cover the anticipated costs of implementing this Act. Directs the court to award the amounts recommended by the SIPC if certain allowances are to be paid by the SIPC without reasonable expectation of recoupment and there is no difference between the amounts requested and the amounts recommended.
Requires SIPC to select an independent public accountant to perform an annual audit of the trustee of the debtor in a liquidation proceeding for which SIPC does not have a reasonable expectation of recoupment of the advances it made for the proceeding.

House Republican Conference Summary

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House Democratic Caucus Summary

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The bill contains the following citations to other parts of U.S. law:

United States Code

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