Open Cases

Legend Securities, Inc.

The following are open liquidation cases in which the six-month claims filing period is closed.

Global Arena Capital Corp.

Westor Capital Group, Inc.

Bernard L. Madoff Investment Securities LLC

Lehman Brothers Inc.

Message from the Board of Directors

The Year in Review

In 2016 SIPC initiated one new customer protection proceeding, the first new case since 2013. Much progress also was made on SIPC’s existing brokerage firm liquidation proceedings.

Global Arena Capital Corp.

On January 28, SIPC initiated a customer protection proceeding for Global Arena Capital Corp. in the federal District Court in Manhattan. In a rare event, the brokerage opposed SIPC, claiming that no customers were owed any cash or securities. Working with FINRA and the Securities and Exchange Commission, SIPC brought victims from as far away as Alaska, and presented 11 individual witnesses in a contested trial on February 3. On February 16, the District Court placed the firm in liquidation and designated SIPC as trustee.

The Global Arena case is an excellent example of how SIPC and securities regulators work together, under the oversight of the courts, to limit the harm to investors and obtain relief for investors as quickly as possible.

Ongoing Cases

SIPC initiated the liquidation of MF Global Inc. on October 31, 2011. Based on the amount of assets, this was the eighth largest insolvency, of any kind, in history. Early in 2016, Trustee James Giddens completed the liquidation with remarkable results. All securities customers were paid in full without the need for SIPC advances. All commodities customers were paid in full. The firm’s General Creditors received 95 cents on the dollar.

Lehman Brothers Inc., the largest insolvency of any kind, is also moving rapidly to a conclusion. While a number of judicial proceedings remain on appeal, all securities customers have received the contents of their accounts without the needs for SIPC advances, secured creditors and priority creditor claims have been paid in full, and a distribution of $8.8 billion has been made to general creditors.

The liquidation of Bernard L. Madoff Investment Securities LLC involves the largest Ponzi Scheme in history. While complex litigation to recover more assets of the victims continues, the results to date have exceeded expectations. The Trustee has distributed $9.47 billion, with 1,303 accounts fully satisfied. Any customer that gave Madoff, net, up to $1,253,000 has been made whole. Customers with larger claims have received 60% of the net amount given to Madoff, plus $500,000 from SIPC. The process of asset recovery continues and the Board expects additional distributions in 2017.

Looking Forward

SIPC continues to look for ways to return customer assets more quickly and efficiently. Among other initiatives in 2017, we hope to implement technology that will allow customers to file their claims electronically.

For securities brokerage firms, their customers, and SIPC, cybersecurity remains a priority. SIPC is an active member of the Financial and Banking Information Infrastructure Committee (FBIIC), which aims to coordinate and plan the prevention of cyberattacks and respond to successful attacks as promptly as possible. The Committee, hosted by the Department of the Treasury, identifies critical infrastructure assets and establishes secure communications capabilities among financial regulators for communicating during an emergency. In 2016, working with the principals of U.S. financial regulatory agencies such as the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, SIPC participated in the review of several initiatives, including a Presidential Policy Directive on U.S. Cyber Incident Coordination Policy and the G7 Fundamental Elements of Cybersecurity for the Financial Sector. This effort is ongoing.