Quote:The Brokerage Defendants contend that they do not have control over their
customers’ accounts, yet the custodial agreements between the Brokerage
Defendants, as well as their statements to this Court, establish that they do, in fact,
have such control.
• The Brokerage Defendants tell this Court that the due bill payments were never in
their accounts but went straight to their customers; but, as alleged in the Amended
Complaint, DTCC deposits these funds directly into the accounts of the Brokerage
Defendants.
• The Brokerage Defendants tell this Court that they were not enriched because, they
allege, their customers also received funds; but this suggestion is flatly wrong,
because, in addition to being directly enriched by receiving funds to which they did
not have a right to in the first instance, it is plausible that the Brokerage Defendants
were indirectly enriched by the receipt of these funds (for example, through float
on the principal sums, through transaction fees, and to the extent the due bill
payment satisfied customers’ debts to the Brokerage Defendants).
Quote:The Amended Complaint further alleges that the Brokerage Defendants have the power and responsibility to reverse erroneous credits. In DTCC’s interim accounting system, errors sometmes occur, and when they do, a “post-payable adjustment” must be made to make the parties whole and prevent a windfall. Depository Trust Corporation Distributions Service Guide, at *32
(Dkt. No. 22-2); Securities and Exchange Commission Release No. 34-67599 Approving Rule
Change at *2-3, Exhibit A (discussing industry practice). The Amended Complaint specifically alleges that the standard practice for addressing erroneous debits and credits by DTCC was for the erroneously credited party (i.e., the Brokerage Defendants) to make whole the erroneously debited party (i.e., COR). The Brokerage Defendants are “participants” of DTCC and bound by the agreements and rules that DTCC implements. Those rules plainly provide for post-payable adjustments. Moreover, in the instance where a participant wrongfully credits their customers’ accounts based on the interim accounting error, it is the participant’s, not the customers’, responsibility to reverse the deposits and accompanying interest: “[p]articipants must also process adjustment to their customers’ accounts for the misapplied principal and associated interest.”
Exhibit A, at *3 (emphasis added). Moreover, both DTCC and the SEC recognize that a Court order (such as the one sought here) can remedy the erroneous credit at any time.
$CRGP
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U.S. Constitution
"The Preamble
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
Oath
"I solemnly swear to support and defend the Constitution of the United States of America"
The Flag
"I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all."
"The Preamble
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
Oath
"I solemnly swear to support and defend the Constitution of the United States of America"
The Flag
"I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all."
Quote:If the broker-dealer fails to deliver for 13 days, the regulation imposes a “close out” duty to purchase and deliver securities “of like kind and quantity.”
https://www.bloomberg.com/opinion/articles/20...ify%20wall
https://www.scotusblog.com/case-files/cases/m...v-manning/
