Booby traps in SEC’s Investors Protection Fund (2)

The objective of the National Investors Protection Fund (NIPF) being proposed by the Securities and Exchange Commission (SEC) is to provide compensation to some class of investors when they suffer loss due to fraud or insolvency of some specified capital market operators.

In addition to some of the weaknesses in the guidelines for the NIPF, which had earlier been identified by Investors Forum, last week, we indicated that some provisions are booby traps, which may frustrate attempts by investors to get compensation from the Fund.

One of such booby trap is contained in Part 11 of the guidelines, which is titled “Adjusted Payment”. Continue Reading