17 C.F.R. § 300.300

Definitions

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For the purpose of these rules, adopted pursuant to section 8(e) of the Securities Investor Protection Act of 1970, as amended (hereinafter referred to as “the Act”):

(a) The term failed to receive shall mean a contractual commitment of the debtor made in the ordinary course of business to pay to another broker or dealer the contract price in cash upon receipt from such broker or dealer of securities purchased: Provided, That the respective obligations of the parties remained outstanding until the close of business on the filing date as defined in section 16(7) of the Act (hereinafter referred to as the “filing date”).

(b) The term failed to deliver shall mean a contractual commitment of the debtor, made in the ordinary course of business, to deliver securities to another broker or dealer against receipt from such broker or dealer of the contract price in cash: Provided, That the respective obligations of the parties remained outstanding until the close of business on the filing date.

(c) The term open contractual commitment shall mean a failed to receive or a failed to deliver which had a settlement date prior to the filing date and the respective obligations of the parties remained outstanding on the filing date or had a settlement date which occurs on or within three business days subsequent to the filing date: Provided, however, That the term “open contractual commitment” shall not include any contractual commitment for which the security which is the subject of the trade had not been issued by the issuer as of the trade date.

(d) The term customer shall mean a person (other than a broker or dealer) in whose behalf a broker or dealer has executed a transaction out of which arose an open contractual commitment with the debtor, but shall not include any person to the extent that such person at the filing date (1) had a claim for property which by contract, agreement of understanding, or by operation of law, was a part of the capital of the broker or dealer who executed such transaction or was subordinated to the claims of creditors of such broker or dealer, or (2) had a relationship with the debtor which is specified in section 9(a)(4) of the Act.

[44 FR 21211, Apr. 9, 1979, as amended at 62 FR 10451, Mar. 7, 1997]

Notes of Decisions

Cited in 6 cases, 1985–1998 · leading case: In Re Adler Coleman Clearing Corp., 211 B.R. 486 (Bankr. S.D.N.Y. 1997).

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In Re Adler Coleman Clearing Corp., 211 B.R. 486 (Bankr. S.D.N.Y. 1997). · cites it 5× “It argues that under 17 C.F.R. § 300.300 (b), the Trustee’s failure to complete the Abbotts Labs transactions constitutes a “failed to deliver,” and therefore, the transactions were “open contractual commitments” of debtor on the Filing Date pursuant to 17 C.”

In Re Bell & Beckwith, Debtors. James L. Murray & Phyllis J. Murray v. Patrick A. McGraw Tr. Sec. Inv. Prot. Corp., 821 F.2d 333 (6th Cir. 1987). · cites it 2× “” 17 C.F.R. § 300.300 (b) & (c) (1986). The contractual commitments of the debtor to the various broker/purchasers in the Murray transactions fit this definition.”

In Re Adler Coleman Clearing Corp., 195 B.R. 266 (Bankr. S.D.N.Y. 1996). “§ 78fff-3(a); 17 C.F.R. Part 300.300. Congress did not include compensation for market losses suffered by a customer during the pendency of a SIPA liquidation proceeding within the definition of net equity.”

In Re AR Baron Co., Inc., 226 B.R. 790 (Bankr. S.D.N.Y. 1998). “SIPA § 78fff-2(e); 17 C.F.R. Part 300.300; In re Stalvey & Associates, Inc.”

In Re John Muir & Co., 51 B.R. 150 (Bankr. S.D.N.Y. 1985). “-300(a), (c) ( 17 C.F.R. § 300.300 (a), (c)). It is clear from the statutory language and from the rules that a stock loan such as the present one is not protected under SIPA as an open contractual commitment.”

RCM Capital Mgmt., L.L.C. v. Mishkin ex rel. Adler Coleman Clearing Corp. (In re Adler, Coleman Clearing Corp.), 221 B.R. 321 (S.D.N.Y. 1998). “First, because the SIPA rules entitled Close-Out or Completion of Open Contractual Commitment rules ( 17 C.F.R. § 300.300 et seq.) were applicable to this transaction, the Trustee was required to complete it.”

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