Bankruptcy and Insolvency Act

Version of section 261 from 2004-12-15 to 2009-09-17:


Marginal note:Vesting of securities, etc., in trustee

  •  (1) Where a securities firm becomes bankrupt, securities owned by the securities firm and securities and cash held by or for the account of the securities firm or a customer, other than customer name securities, vest in the trustee.

  • Marginal note:Establishment of a customer pool fund and a general fund

    (2) Where a securities firm becomes bankrupt and property vests in a trustee under subsection (1) or under other provisions of this Act, the trustee shall establish

    • (a) a fund, in this Part called the "customer pool fund", including therein

      • (i) securities, including those obtained after the date of the bankruptcy, but excluding customer name securities and excluding eligible financial contracts to which the firm is a party, that are held by or for the account of the firm

        • (A) for a securities account of a customer,

        • (B) for an account of a person who has entered into an eligible financial contract with the firm and has deposited the securities with the firm to assure the performance of the person’s obligations under the contract, or

        • (C) for the firm’s own account,

      • (ii) cash, including cash obtained after the date of the bankruptcy, and including

        • (A) dividends, interest and other income in respect of securities referred to in subparagraph (i),

        • (B) proceeds of disposal of securities referred to in subparagraph (i), and

        • (C) proceeds of policies of insurance covering claims of customers to securities referred to in subparagraph (i),

      •  that is held by or for the account of the firm

        • (D) for a securities account of a customer,

        • (E) for an account of a person who has entered into an eligible financial contract with the firm and has deposited the cash with the firm to assure the performance of the person’s obligations under the contract, or

        • (F) for the firm’s own securities account, and

      • (iii) any investments of the securities firm in its subsidiaries that are not referred to in subparagraph (i) or (ii); and

    • (b) a fund, in this Part called the "general fund", including therein all of the remaining vested property.

  • 1997, c. 12, s. 118
  • 2004, c. 25, s. 101(F)
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