U.S. Code » Title 15 » Chapter CHAPTER 2A— SECURITIES AND TRUST INDENTURES › Subchapter SUBCHAPTER III— TRUST INDENTURES

15 U.S.C. § 77bbb

Necessity for regulation

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(a) Practices adversely affecting publicUpon the basis of facts disclosed by the reports of the Securities and Exchange Commission made to the Congress pursuant to section 78jj of this title and otherwise disclosed and ascertained, it is hereby declared that the national public interest and the interest of investors in notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein, which are offered to the public, are adversely affected—(1) when the obligor fails to provide a trustee to protect and enforce the rights and to represent the interests of such investors, notwithstanding the fact that (A) individual action by such investors for the purpose of protecting and enforcing their rights is rendered impracticable by reason of the disproportionate expense of taking such action, and (B) concerted action by such investors in their common interest through representatives of their own selection is impeded by reason of the wide dispersion of such investors through many States, and by reason of the fact that information as to the names and addresses of such investors generally is not available to such investors;(2) when the trustee does not have adequate rights and powers, or adequate duties and responsibilities, in connection with matters relating to the protection and enforcement of the rights of such investors; when, notwithstanding the obstacles to concerted action by such investors, and the general and reasonable assumption by such investors that the trustee is under an affirmative duty to take action for the protection and enforcement of their rights, trust indentures (A) generally provide that the trustee shall be under no duty to take any such action, even in the event of default, unless it receives notice of default, demand for action, and indemnity, from the holders of substantial percentages of the securities outstanding thereunder, and (B) generally relieve the trustee from liability even for its own negligent action or failure to act;(3) when the trustee does not have resources commensurate with its responsibilities, or has any relationship to or connection with the obligor or any underwriter of any securities of the obligor, or holds, beneficially or otherwise, any interest in the obligor or any such underwriter, which relationship, connection, or interest involves a material conflict with the interests of such investors;(4) when the obligor is not obligated to furnish to the trustee under the indenture and to such investors adequate current information as to its financial condition, and as to the performance of its obligations with respect to the securities outstanding under such indenture; or when the communication of such information to such investors is impeded by the fact that information as to the names and addresses of such investors generally is not available to the trustee and to such investors;(5) when the indenture contains provisions which are misleading or deceptive, or when full and fair disclosure is not made to prospective investors of the effect of important indenture provisions; or(6) when, by reason of the fact that trust indentures are commonly prepared by the obligor or underwriter in advance of the public offering of the securities to be issued thereunder, such investors are unable to participate in the preparation thereof, and, by reason of their lack of understanding of the situation, such investors would in any event be unable to procure the correction of the defects enumerated in this subsection.(b) Declaration of policy

Practices of the character above enumerated have existed to such an extent that, unless regulated, the public offering of notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein, by the use of means and instruments of transportation and communication in interstate commerce and of the mails, is injurious to the capital markets, to investors, and to the general public; and it is hereby declared to be the policy of this subchapter, in accordance with which policy all the provisions of this subchapter shall be interpreted, to meet the problems and eliminate the practices, enumerated in this section, connected with such public offerings.

(May 27, 1933, ch. 38, title III, § 302, as added Aug. 3, 1939, ch. 411, 53 Stat. 1150.)Editorial NotesReferences in Text

Section 78jj of this title, referred to in subsec. (a), was omitted from the Code.

Executive DocumentsTransfer of Functions

For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.

Notes of Decisions
Cited in 29 cases, 1942–2017 · leading case: Caplin v. Marine Midland Grace Trust Co. of New York, 406 U.S. 416 (1972).
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Caplin v. Marine Midland Grace Trust Co. of New York, 406 U.S. 416 (1972). · cites it 4× “This problem and others are specifically mentioned in 15 U. S. C. § 77bbb as establishing a necessity for regulation.”
Marblegate Asset Mgmt., LLC v. Educ. Mgmt. Fin. Corp., 846 F.3d 1 (2d Cir. 2017). “See 15 U.S.C. § 77bbb(a) (citing “reports of the [SEC]” as “the basis of facts” for promulgating the TLA).”
Calderon-Serra v. Wilimington Trust Co., 715 F.3d 14 (1st Cir. 2013). “The district court rejected this proposition,. see Calderón-Serra, 2011 .”
AG Capital Funding Partners, L.P. v. State Street Bank & Trust Co., 896 N.E.2d 61 (NY 2008). “2, at 261 [5th ed]), was enacted because “previous abuses by indenture trustees had adversely affected the national public interest and the interest of investors in notes, bonds [and] debentures, 15 U.S.C. § 77bbb (a), and Congress sought to address this national problem in a…”
BlackRock Allocation Target Shares v. Wells Fargo Bank, 247 F. Supp. 3d 377 (S.D.N.Y. 2017). “1996) (citations omitted) (quoting 15 U.S.C. § 77bbb(a)) (citing S. Rep. No.”
Akanthos Capital Mgmt., LLC v. Atlanticus Holdings Corp., 734 F.3d 1269 (11th Cir. 2013). · cites it 2× “” 15 U.S.C. § 77bbb(a)(1). The Act did not empower trustees to work collectively to the exclusion of the debt holders.”
Royal Park Investments SA/NV v. HSBC Bank USA, Nat'l Ass'n, 109 F. Supp. 3d 587 (S.D.N.Y. 2015). “1996) (explaining that the law was "enacted because previous abuses by indenture trustees had adversely affected 'the national public interest and the interest of investors in notes, bonds], and] debentures .”
BOKF, N.A. v. Caesars Ent. Corp., 144 F. Supp. 3d 459 (S.D.N.Y. 2015). · cites it 2× “’”) (quoting 15 U.S.C. § 77bbb(a)). . 15 U.S.C. § 77ppp(a).”
DELL'OCA v. Bank of New York & Trust Co., 71 Cal. Rptr. 3d 737 (Cal. Ct. App. 2008). “(See 15 U.S.C. § 77bbb.) In their book, Corporate Trust Administration and *537 Management (5th ed.”
LNC Investments, Inc. v. First Fid. Bank, Nat'l Ass'n, 935 F. Supp. 1333 (S.D.N.Y. 1996). “” 15 U.S.C. § 77bbb(a) (1994). A private right of action for investors helps to achieve that purpose.”
MeehanCombs Global Credit Opportunities Funds, LP v. Caesars Ent. Corp., 80 F. Supp. 3d 507 (S.D.N.Y. 2015). “'”) (quoting 15 U.S.C. § 77bbb(a)). . 15 U.S.C. § 77ppp(a).”
Semi-Tech Litig., LLC v. Bankers Trust Co., 353 F. Supp. 2d 460 (S.D.N.Y. 2005). “1985) (“Trust indentures are important mechanisms for servicing corporate debt and banks play an essential role in the process that brings corporate fi-nancings to the public market.”
Show all 29 citing cases →
— 15 U.S.C. § 77bbb(2) — 1 case
Semi-Tech Litig., LLC v. Bankers Trust Co., 353 F. Supp. 2d 460 (S.D.N.Y. 2005). “1985) (“Trust indentures are important mechanisms for servicing corporate debt and banks play an essential role in the process that brings corporate fi-nancings to the public market.”
— 15 U.S.C. § 77bbb(a) — 10 cases
Marblegate Asset Mgmt., LLC v. Educ. Mgmt. Fin. Corp., 846 F.3d 1 (2d Cir. 2017). “See 15 U.S.C. § 77bbb(a) (citing “reports of the [SEC]” as “the basis of facts” for promulgating the TLA).”
BlackRock Allocation Target Shares v. Wells Fargo Bank, 247 F. Supp. 3d 377 (S.D.N.Y. 2017). “1996) (citations omitted) (quoting 15 U.S.C. § 77bbb(a)) (citing S. Rep. No.”
Royal Park Investments SA/NV v. HSBC Bank USA, Nat'l Ass'n, 109 F. Supp. 3d 587 (S.D.N.Y. 2015). “1996) (explaining that the law was "enacted because previous abuses by indenture trustees had adversely affected 'the national public interest and the interest of investors in notes, bonds], and] debentures .”
BOKF, N.A. v. Caesars Ent. Corp., 144 F. Supp. 3d 459 (S.D.N.Y. 2015). “’”) (quoting 15 U.S.C. § 77bbb(a)). . 15 U.S.C. § 77ppp(a).”
LNC Investments, Inc. v. First Fid. Bank, Nat'l Ass'n, 935 F. Supp. 1333 (S.D.N.Y. 1996). “” 15 U.S.C. § 77bbb(a) (1994). A private right of action for investors helps to achieve that purpose.”
— 15 U.S.C. § 77bbb(a)(1) — 3 cases
Akanthos Capital Mgmt., LLC v. Atlanticus Holdings Corp., 734 F.3d 1269 (11th Cir. 2013). “” 15 U.S.C. § 77bbb(a)(1). The Act did not empower trustees to work collectively to the exclusion of the debt holders.”
US Bank Nat'l Assoc v. United Airlines Inc (7th Cir. 2005).
Akanthos Capital Mgmt., LLC v. Atlanticus Holdings Corp. (11th Cir. 2013).
— 15 U.S.C. § 77bbb(a)(4) — 2 cases
UnitedHealth Grp. Inc. v. Wilmington Trust Co., 548 F.3d 1124 (8th Cir. 2008).
UnitedHealth Grp. Inc. v. Wilmington Trust Co. (8th Cir. 2008).
— 15 U.S.C. § 77bbb(a)(l) — 2 cases
Zeffiro v. First Pennsylvania Banking & Trust Co., 473 F. Supp. 201 (E.D. Pa. 1979).
US Bank Nat'l Assoc v. United Airlines Inc, 406 F.3d 918 (7th Cir. 2005).
— 15 U.S.C. § 77bbb(b) — 1 case
Calderon-Serra v. Wilimington Trust Co., 715 F.3d 14 (1st Cir. 2013). “The district court rejected this proposition,. see Calderón-Serra, 2011 .”
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