COURT CLEARS SIPC TO STEP IN TO DEAL WITH MISSING
$4.5 MILLON AT COLORADO BROKERAGE FIRM
WASHINGTON, D.C. - February 7, 2003 - The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at bankrupt brokerage firms, announced today that the U.S. District Court for the District of Colorado has appointed a trustee to liquidate Rocky Mountain Securities and Investments, Inc., in the wake of the discovery that $4.5 million is unaccounted for at the Denver-based brokerage firm.
SIPC will protect the estimated 1,400 investors who have done business through Rocky Mountain Securities and Investments under the federal Securities Investor Protection Act (SIPA) of 1970.
Yesterday, Federal Judge Marsha Krieger appointed Denver attorney John D. Shively as the trustee for liquidation of the firm and also named the Denver law firm of Faegre & Benson as counsel to the trustee. Rocky Mountain Securities and Investments customers can reach the trustee at (303) 607-3500.
In addition to claim forms that will be provided by U.S. mail, information about the SIPC liquidation proceeding will be available online at http://www.sipc.org.
At this time, no further details about the liquidation proceeding are available to the media from SIPC or the trustee, pending the outcome of the investigation. New details, including developments in the liquidation proceeding, will be made available on a timely basis in future weeks.
From its creation by Congress in 1970 through December 2001, SIPC has advanced $513 million in order to make possible the recovery of $14.0 billion in assets for an estimated 622,000 investors. SIPC estimates that more than 99 percent of eligible investors have been made whole in the failed brokerage firm cases that it has handled to date.
SIPC is an important part of the overall system of investor protection in the United States. While a number of federal, self-regulatory and state securities agencies deal with cases of investment fraud, SIPC's focus is both different and narrow: Restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.
SIPC either acts as trustee or works with an independent court-appointed trustee in a fraud case to recover funds. The statute that created SIPC rules provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.
Recovered funds are used to pay investors whose claims exceed SIPC's protection limit of $500,000. SIPC often draws down its reserve to aid investors. Recovered funds also are used to replenish SIPC's reserve in the event that the reserve is tapped in the early stages of a liquidation proceeding.
FOR MORE INFORMATION, CONTACT:
Ailis Aaron, The Hastings Group,
(703) 276-1116 or firstname.lastname@example.org.
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