SENATE REPORT NO. 95-989
[Section 765] Subsection (a) of this section [enacted as section 766(h)] provides that with respect to liquidation of commodity brokers which are not clearing organizations, the trustee shall distribute [commodity] customer property to customers on the basis and to the extent of such customers' allowed net equity claims, and in priority to all other claims. This section grants customers' claims first priority in the distribution of the estate. Subsection (b) [enacted as section 766(i)] grants the same priority to member property and other customer property in the liquidation of a clearing organization. A fundamental purpose of these provisions is to ensure that the property entrusted by customers to their brokers will not be subject to the risks of the broker's business and will be available for disbursement to customers if the broker becomes bankrupt.
Some tough questions need to be asked to those who approved the last minute handing over of what was primarily a commodities broker into the hands of a trustee experienced only with securities brokers, and pursuant to SIPA legislation that does not afford protections first to the commodities customers. The entire model of customer protection under SIPA is that it establishes an insurance fund for securities customers. Because no such fund exists for commodities customers, they are put at an extreme disadvantage from the outset.
Who made the decision to throw MF Global into a SIPA liquidation? More to come...
http://www.zerohedge.com/contributed/why-sipc-mf-global-customers-were-thrown-under-bus-day-1?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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