William S. Jasien
President & CEO
Stonehedge Global Partners
Daniel M. Covitz
Deputy Director, Federal Reserve Board, Division of Research and Statistics
Board of Governors of the Federal Reserve System
CEO and Founder
Gregory S. Karawan
Senior Vice President & General Counsel, Insurance & Wealth Mgmt; and Global Chief Litigation Counsel
W. Moses Kim
Director, U.S. Department of the Treasury
Office of Financial Institutions Policy
Message from the Board of Directors
The Year in Review
SIPC made substantial progress on all fronts in 2017. SIPC initiated a direct payment procedure to protect the customers of a small brokerage firm, closed two liquidation proceedings, and made major progress in ongoing cases.
Legend Securities, Inc.
In October, SIPC began a direct payment procedure, which is an out-of-court claims process, for Legend Securities, Inc. Claims are now being received and reviewed.
TWS Financial, LLC and North American Clearing, Inc.
Liquidation proceedings for TWS Financial, LLC and North American Clearing, Inc. were brought to conclusion in 2017. The North American Clearing case was the oldest pending proceeding on SIPC’s roster, having been initiated in May 2008.
Lehman Brothers Inc.
While not fully completed, Lehman Brothers Inc., part of the largest insolvency proceeding of any kind, is a resounding success. All securities customers have received the content of their securities accounts, secured and other priority claims have been paid in full, the trustee has distributed $8.8 billion, and it was not necessary for SIPC to advance funds for either customers or administration of the estate. The case remains open for the resolution of a small number of judicial proceedings in which the trustee is an appellee.
Bernard L. Madoff Investment Securities LLC
The trustee for the liquidation of Bernard L. Madoff Investment Securities LLC, the largest Ponzi Scheme in history, continues to collect and distribute funds to the victims of this case. At this juncture, the trustee has distributed $11.43 billion, with 1,388 accounts now fully satisfied. Any customer that gave Madoff Investment Securities up to $1,385,000 has now been made whole. Customers with larger claims have received more than 63% of the net amount they gave to Madoff Investment Securities, plus $500,000 from SIPC. More distributions are expected as complex litigation to recover additional assets continues.
Westor Capital Group, Inc.
SIPC serves as trustee for Westor Capital Group, Inc. That proceeding is substantially complete, with one disputed matter still at issue. Full resolution of the case is expected in 2018.
Global Arena Capital Corp.
In Global Arena Capital Corp., all customer claims have been resolved. SIPC, acting as trustee, has sued several individuals and related entities, for the repayment of loans made to them by the brokerage and the recovery of monies transferred.
In September 2017, SIPC, in conjunction with the Financial Industry Regulatory Authority (FINRA), eased the regulatory burden on SIPC members with respect to the filing of Annual Reports with SIPC. SIPC and FINRA signed a services agreement so that the Annual Report need only be submitted once with FINRA. That submission will satisfy each brokerage firm’s filing obligation with SIPC, easing regulatory compliance and costs.
We expect to begin offering electronic claims filing procedures to speed the satisfaction of customer claims. In 2018, we will review SIPC’s online presence, with a view to refreshing SIPC’s website to improve convenience, clarity, and ease of use. SIPC continues to play a role in the Financial and Banking Information Infrastructure Committee (FBIIC), which aims to coordinate and plan the prevention of cyberattacks and respond promptly should an attack within the financial industry occur.