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U.S. Code as of:
01/19/04
Section 766. Treatment of customer property
(a) The trustee shall answer all margin calls with respect to a
specifically identifiable commodity contract of a customer until
such time as the trustee returns or transfers such commodity
contract, but the trustee may not make a margin payment that has
the effect of a distribution to such customer of more than that to
which such customer is entitled under subsection (h) or (i) of this
section.
(b) The trustee shall prevent any open commodity contract from
remaining open after the last day of trading in such commodity
contract, or into the first day on which notice of intent to
deliver on such commodity contract may be tendered, whichever
occurs first. With respect to any commodity contract that has
remained open after the last day of trading in such commodity
contract or with respect to which delivery must be made or accepted
under the rules of the contract market on which such commodity
contract was made, the trustee may operate the business of the
debtor for the purpose of -
(1) accepting or making tender of notice of intent to deliver
the physical commodity underlying such commodity contract;
(2) facilitating delivery of such commodity; or
(3) disposing of such commodity if a party to such commodity
contract defaults.
(c) The trustee shall return promptly to a customer any
specifically identifiable security, property, or commodity contract
to which such customer is entitled, or shall transfer, on such
customer's behalf, such security, property, or commodity contract
to a commodity broker that is not a debtor under this title,
subject to such rules or regulations as the Commission may
prescribe, to the extent that the value of such security, property,
or commodity contract does not exceed the amount to which such
customer would be entitled under subsection (h) or (i) of this
section if such security, property, or commodity contract were not
returned or transferred under this subsection.
(d) If the value of a specifically identifiable security,
property, or commodity contract exceeds the amount to which the
customer of the debtor is entitled under subsection (h) or (i) of
this section, then such customer to whom such security, property,
or commodity contract is specifically identified may deposit cash
with the trustee equal to the difference between the value of such
security, property, or commodity contract and such amount, and the
trustee then shall -
(1) return promptly such security, property, or commodity
contract to such customer; or
(2) transfer, on such customer's behalf, such security,
property, or commodity contract to a commodity broker that is not
a debtor under this title, subject to such rules or regulations
as the Commission may prescribe.
(e) Subject to subsection (b) of this section, the trustee shall
liquidate any commodity contract that -
(1) is identified to a particular customer and with respect to
which such customer has not timely instructed the trustee as to
the desired disposition of such commodity contract;
(2) cannot be transferred under subsection (c) of this section;
or
(3) cannot be identified to a particular customer.
(f) As soon as practicable after the commencement of the case,
the trustee shall reduce to money, consistent with good market
practice, all securities and other property, other than commodity
contracts, held as property of the estate, except for specifically
identifiable securities or property distributable under subsection
(h) or (i) of this section.
(g) The trustee may not distribute a security or other property
except under subsection (h) or (i) of this section.
(h) Except as provided in subsection (b) of this section, the
trustee shall distribute customer property ratably to customers on
the basis and to the extent of such customers' allowed net equity
claims, and in priority to all other claims, except claims of a
kind specified in section 507(a)(1) of this title that are
attributable to the administration of customer property. Such
distribution shall be in the form of -
(1) cash;
(2) the return or transfer, under subsection (c) or (d) of this
section, of specifically identifiable customer securities,
property, or commodity contracts; or
(3) payment of margin calls under subsection (a) of this
section.
Notwithstanding any other provision of this subsection, a customer
net equity claim based on a proprietary account, as defined by
Commission rule, regulation, or order, may not be paid either in
whole or in part, directly or indirectly, out of customer property
unless all other customer net equity claims have been paid in full.
(i) If the debtor is a clearing organization, the trustee shall
distribute -
(1) customer property, other than member property, ratably to
customers on the basis and to the extent of such customers'
allowed net equity claims based on such customers' accounts other
than proprietary accounts, and in priority to all other claims,
except claims of a kind specified in section 507(a)(1) of this
title that are attributable to the administration of such
customer property; and
(2) member property ratably to customers on the basis and to
the extent of such customers' allowed net equity claims based on
such customers' proprietary accounts, and in priority to all
other claims, except claims of a kind specified in section
507(a)(1) of this title that are attributable to the
administration of member property or customer property.
(j)(1) The trustee shall distribute customer property in excess
of that distributed under subsection (h) or (i) of this section in
accordance with section 726 of this title.
(2) Except as provided in section 510 of this title, if a
customer is not paid the full amount of such customer's allowed net
equity claim from customer property, the unpaid portion of such
claim is a claim entitled to distribution under section 726 of this
title.
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