CarVal v. Giddens, No. 14-890 (2d Cir. 2015)
Annotate this CaseAfter Lehman entered into a Securities Investor Protection Act (SIPA), 15 U.S.C. 78lll(2)(A), liquidation, Doral submitted timely claims asserting that it was entitled to recover the profit from a repurchased agreement. The SIPA Trustee denied these claims, concluding that Doral was not a “customer” of Lehman, and therefore was not protected by SIPA. Doral promptly objected to the Trustee’s denial, but shortly thereafter transferred its claims to CarVal. The bankruptcy court affirmed the Trustee's determination that the repos did not make Doral or CarVal a customer under SIPA. The court concluded that an investor who delivers securities to a broker‐dealer as part of a repurchase agreement is not protected by SIPA because the investor did not entrust assets to the broker‐dealer. Accordingly, the court affirmed the lower courts' determination that CarVal is not a customer for purposes of SIPA.
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