President & CEO
Stonehedge Global Partners
Chairman
Cedar Street Asset Management, LLC
Chairman
Options Solutions, LLC
Co-founder and Chairperson
Primetime Partners
Deputy Director, Division of Research and Statistics
Board of Governors of the Federal Reserve System
Director, Office of Financial Institutions Policy
Department of the Treasury
Message from the Chair
2023 was a comparatively quiet, although a busy, year for SIPC. While litigation remained active in the Madoff case, no new liquidations under the Securities Investor Protection Act (SIPA) were initiated in 2023, a testament to the continued effectiveness of securities regulation and the watchful eye of the SEC, FINRA and state securities regulators. With advances in technology leading industry change, SIPC devoted much of the year to staying current on such changes, and to modernizing its own internal processes. This year, as always, SIPC remained focused on the adequacy of the SIPC Fund, indispensable to the fulfillment of SIPC’s mission of investor protection.
Madoff
The efforts of the SIPA Trustee and his staff in the Madoff case, with the support of SIPC and its staff, continued to yield positive results. In early 2024, the SIPA Trustee will make a 15th distribution to Madoff customers with allowed claims. With the upcoming distribution of over $78 million, a total of $14.5 billion will have been distributed to customers, which includes approximately $850 million in advances from SIPC. This means that a customer with an allowed claim of up to $1.731 million will have been fully satisfied and other customers with larger allowed claims will have received 71.136 percent of their claims. The administrative expenses of the proceeding do not reduce the amounts available to customers since they are paid for by SIPC.
Modernization
Although litigation continues in the Madoff case to maximize the recoveries for customers, the absence of new cases allowed SIPC to focus on its internal processes. Over the year, SIPC continued to transition its infrastructure to the cloud, and in November, SIPC launched its broker-dealer portal. Through the portal, broker-dealers file SIPC forms electronically, pay their assessments, and communicate electronically with SIPC’s Membership Department.
In order to educate users on the portal, SIPC launched an informational program. The program includes a series of monthly interactive webinars that explain how to access the portal and its functionality. Each webinar includes a question and answer session so that SIPC can respond directly to participants’ concerns. For those unable to attend, a recording and transcript of the webinar are posted on the SIPC web site. For additional guidance, the web site includes a list of portal FAQs. Although work continues on the portal to increase its capability and to optimize the user experience, the portal is off to a promising start.
The Fund
As it moves steadily toward its target of $5 billion, the SIPC Fund remains healthy. The Fund is used to satisfy customer claims, to pay the administrative expenses of liquidation proceedings where the broker-dealer’s general estate is insufficient, and to pay the operating expenses of SIPC. SIPC is grateful to its membership of registered securities broker or dealers for their ongoing support. Through their payment of assessments, SIPC members ensure that customers will not lose their hard-earned savings should a member broker-dealer fail financially.
Whether the SIPC Fund is sufficient for its purposes is a question regularly reviewed by the SIPC Board. Although SIPC has access to a federal $2.5 billion line of credit, which it has never drawn upon, the Board continues to explore ways of increasing the Fund in an emergency so that taxpayer money is never needed. At the forefront of the Board’s concerns, therefore, is the adequacy of the SIPC Fund, as well as the safety of its systems as SIPC automates and modernizes. As a member of the Financial and Banking Information Infrastructure Committee, SIPC stays informed on significant issues relating to cybersecurity and critical infrastructure within the financial services sector.
With Thanks
As 2023 comes to a close, there are many to thank who have been and are important to SIPC’s success. Among them are SIPC’s member broker-dealers; the securities regulators including, in particular, the SEC and FINRA who partner with SIPC; investor and industry groups whose views SIPC values; and above all, the SIPC staff who remain committed to SIPC’s mission of investor protection and who work tirelessly toward that end.
On a personal note, I am grateful for my appointment to a second term on the SIPC Board. I thank my fellow Directors for their support and their commitment to SIPC and its staff. As we move forward, however, we are aware of the challenges ahead. The fast pace of technology today which is reshaping the securities industry, the innovative new products introduced in the marketplace, present fresh challenges not only for securities regulators, but for SIPC. SIPC will stay attuned to such changes and focused on its core mission, with the goal that investor confidence remain strong so that the nation’s markets, and the economy, continue to thrive.
Claudia Slacik
Chair