SECURITIES INVESTOR PROTECTION CORPORATION, EGYPT INVESTOR PROTECTION FUND TO COOPERATE IN CROSS-BORDER BROKERAGE INSOLVENCY, LIQUIDATION CASES
WASHINGTON, D.C. – February 27, 2009 – The Securities Investor Protection Corporation (SIPC), which is chartered by the U.S. Congress to maintain a special reserve fund to protect the customers of insolvent brokerage firms, and its Egyptian counterpart, the Egypt Investor Protection Fund (EIPF), today signed a memorandum of understanding (MOU) in order to work together more closely in the event of the insolvency of a brokerage firm doing business in both the United States and Egypt.
SIPC President Stephen Harbeck said: "SIPC and the EIPF are laying the foundation for a strong working relationship. The new Memorandum of Understanding gives a structure to that relationship and that will work to the benefit of investors. The MOU provides for cooperation and efficient handling of claims from investors where there are cross border issues. We will also exchange information on a regular basis."
The MOU was signed on behalf of EIPF by Dr. Ahmed Saad, chairman, Capital Market Authority, Egypt.
Dr. Saad said: "The Egypt Investor Protection Fund is pleased to be a party to the MOU with SIPC. With the globalization of the investment industry, EIPF considers it essential to collaborate across borders with other compensation funds to ensure that investor claims will be dealt with expeditiously on an equitable basis."
The SIPC-EIPF Memorandum of Understanding is the fifth such agreement for SIPC. In February 2004, SIPC executed a similar accord with the Financial Services Compensation Scheme, a SIPC-like entity that provides protection to investors in the United Kingdom. In April 2005, a MOU was signed by SIPC and the Canadian Investor Protection Fund (CIPF). SIPC entered into a MOU in June 2006 with the Securities and Futures Investor Protection Center (SFIPC) of Taiwan. Most recently, SIPC and the Korea Deposit Insurance Corporation (KDIC) signed a memorandum of understanding in October 2007.
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2007, SIPC has advanced $507 million in order to make possible the recovery of $15.7 billion in assets for an estimated 626,000 investors.
For more information about SIPC, see "The Investor's Guide to Brokerage Firm Liquidations".
FOR MORE INFORMATION, CONTACT: Leslie Anderson, The Hastings Group, (703) 276-3256, or email@example.com.
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