SECURITIES INVESTOR PROTECTION CORPORATION, KOREA DEPOSIT INSURANCE CORPORATION TO COOPERATE IN CROSS-BORDER BROKERAGE INSOLVENCY, LIQUIDATION CASES
WASHINGTON, D.C., October 29, 2007 – The Securities Investor Protection Corporation (SIPC) and the Korea Deposit Insurance Corporation (KDIC) have entered into a memorandum of understanding (MOU) covering cross-border cases involving brokerage firm insolvencies and liquidations in which the customers are protected by SIPC and/or KDIC. In the U.S., the Securities Investor Protection Corporation (SIPC) maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms.
The new SIPC-KIDC MOU covers “the exchange of information on a regular basis regarding the nature, role and experience” of the two entities and “cooperation when dealing with claims for compensation that involve cross-border issues of member firms.”
SIPC President Stephen Harbeck said: “SIPC and KDIC recognize the potential for cross-border insolvencies of member firms and the prospect of cross border claims from investors. The parties accept the responsibility of cooperating with each other to ensure that investors receive compensation promptly.”
KDIC Chairman & President Jang-Bong Choi said: “SIPC and KDIC desire to provide one another the fullest mutual assistance possible, subject to their available resources, to facilitate the performance of functions with which each investor protection program is entrusted within their respective jurisdictions to secure confidence with their laws and regulations.”
The full text of the SIPC-KIDC memorandum of understanding is available online at "102207sipckdicmou.pdf".
ABOUT THE GROUPS
The Korea Deposit Insurance Corporation was established in 1996 in accordance with the Depositor Protection Act. KDIC’s aim is to sustain stability and safeguard public confidence through an explicit deposit protection system in respect of bank deposits.
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails owing customers cash and securities that are missing from customer accounts. From the time Congress created it in 1970 through December 2006, SIPC has advanced $505 million in order to make possible the recovery of $15.7 billion in assets for an estimated 626,000 investors. Although not every investor is protected by SIPC, SIPC estimates that no fewer than 99 percent of persons who are eligible have been made whole in the failed brokerage firm cases that it has handled to date.
SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. The statute that created SIPC 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.
CONTACT: Ailis Aaron Wolf, for SIPC, +1 (703) 276-3265, or firstname.lastname@example.org.
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