U.S., Chinese Officials to Cooperate in Cross-Border Brokerage Insolvency, Liquidation Cases

U.S., Chinese Officials to Cooperate in Cross-Border Brokerage Insolvency,
Liquidation Cases

WASHINGTON and BEIJING, Nov. 12 /PRNewswire-USNewswire/ -- The Securities
Investor Protection Corporation (SIPC) and the China Securities Investor
Protection Fund Corporation (SIPF) have entered into a memorandum of
understanding (MOU) that will act as a framework for cross-border
communication and cooperation with respect to the similar functions undertaken
by the groups and covered by the laws of each country. In the U.S., the
Securities Investor Protection Corporation (SIPC) maintains a special reserve
fund authorized by Congress to help investors at failed brokerage firms.

The new SIPC-SIPF MOU lays the groundwork for the two entities to "...launch
material cooperation projects in this field and jointly push forward the
securities investor protection in both China and U.S. ... (as) investors and
investment companies begin engaging in related investment portfolio and
investment transactions outside their native countries..."

SIPC President Stephen Harbeck said: "SIPC and SIPF recognize the need for
protection of investors in both countries from insolvencies of member firms
and the need for cooperation in handling cross border claims from investors.
The parties accept the responsibility of working with each other to ensure
that investors in both countries receive compensation promptly."

In his comments on the MOU, SIPF Chairman Chen Gongyan has stated: "The
signing (of this MOU) marks an increasingly closer communication and
cooperation in such areas as information sharing, mutual visit, communication
and consultation between the two parties, and will be definitely a good
beginning for China and U.S. to strengthen bilateral investor protection
cooperation, and helps to promote the healthy and orderly development of
securities markets in both countries."

The full text of the SIPC-SIPF memorandum of understanding is available online
at http://www.sipc.org/pdf/MOU%20China%202009.pdf. The English language Web
site of the China SIPF was also launched simultaneously with the signing
ceremony of the MOU. That URL is http://www.sipf.com.cn/en/.

ABOUT THE GROUPS

The major responsibility of the China Securities Investor Protection Fund
Corporation is to raise, manage and operate a securities investor protection
fund; to monitor risks of securities companies and participate in the risk
disposition of these companies; to indemnify creditors as required by China's
relevant policies in case a securities company is subject to compulsory
regulatory measures, including dissolution, closure, bankruptcy,
administrative takeover by the CSRC and trustee operation; to organize and
participate in the liquidation of the dissolved, closed or bankrupt securities
companies; to manage and dispose of foreclosed assets and safeguard the fund's
rights and interests; to put forward regulatory and disposal suggestions to
the CSRC in case a securities company's operation and management have material
risks that may damage investor's interests and the safety of the securities
market; to join relevant authorities in establishing a rectification mechanism
for the potential risks arising from operation of securities companies.

In the U.S., the Securities Investor Protection Corporation is the 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 2008, SIPC has
advanced $520 million in order to make possible the recovery of $160 billion
in assets for an estimated 761,000 investors.

CONTACT: Ailis Aaron Wolf, for SIPC, +1 (703) 276-3265, or
aaaron@hastingsgroup.com.

SOURCE Securities Investor Protection Corporation, Washington, D.C.

Ailis Aaron Wolf, +1-703-276-3265, aaaron@hastingsgroup.com, for SIPC