As part of its efforts to modernize, the Securities Investor Protection Corp. will hold its first-ever online forum for investors who want to speak out about the SIPC’s operations at 8 p.m. Eastern Daylight Time on Tuesday, September 14 at www.SIPCModernization.org.
SIPC’s announcement of the online forum, released on September 7, comes on the heels of criticism made on July 30 by Rep. Paul Kanjorski (D-Pennsylvania). Kanjorski asserted that the SIPC, which maintains a reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, as well as the Securities Investor Protection Act (SIPA) are outdated and due for an overhaul.
“The many complaints of investors after the failure of Lehman Brothers and the Madoff Ponzi scheme, along with a number of court rulings, make it clear that Congress needs to explore a comprehensive overhaul of SIPA,” said Kanjorski, who is chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
“As part of these efforts, we must also ensure that the SIPC, the entity charged with implementing SIPA, follows the spirit of the existing law and works to protect the best interests of investors,” Kanjorski said in his July 30 statement. “Unfortunately, SIPC has denied the claims of customers based on statement balances provided to them by their brokers, yet SIPC expects customers to use those very same statements to report unauthorized trading in their accounts. This paradox results in a customer’s statement being meaningless whenever it could harm SIPC, but not when it harms the customer.”
The September 14 “listening post” session will be the first of two major national public forums focused on soliciting input about the modernization of SIPC, according to the SIPC release. The effort is part of the SIPC modernization initiative and full-scale review launched on June 17. The SIPC has not been the focus of major new legislation in 30 years.