For Release: Thursday, March 10, 2005
Contact: SIA Corporate Communications (202) 216-2000
SENATE ACTION CLEARS WAY TO END LONG-STANDING INEQUITY IN BANKRUPTCY LAW
WASHINGTON, D.C., March 10, 2005 - The Securities Industry Association applauded today's Senate vote to defeat an amendment which would have jeopardized an important reform to the bankruptcy code in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256), introduced by Senator Charles Grassley (R-IA). Section 414 of the bill corrects a long-standing inequity in the law by eliminating a "per se" ban on investment banks acting as financial advisers in bankruptcy cases.
Under S. 256, bankruptcy judges would be allowed to consider criteria for investment banks currently applied for the banking, accounting, and legal sectors in determining candidates to act as advisers to bankrupt companies.The bill in no way changes the "disinterestedness test," and does not preclude a judge from finding, based on specific facts, that an investment bank is not an appropriate choice to act as an adviser in a particular case on the basis of "material adverse interest."
"S. 256 will put investment banks on a level playing field with accountants, attorneys, and management consultants," said Richard Hunt, SIA senior vice president, federal policy."This change will broaden the pool of eligible candidates, thereby increasing competition and lowering the cost of advisory services."
"Today's Senate action was a victory for fairness," said John Anderson, SIA vice president and director, legislative affairs."We look forward to continuing to work with both the House and Senate to ensure final passage and enactment of this important legislation."
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The Securities Industry Association brings together the shared interests of nearly 600 securities firms to accomplish common goals. SIA's primary mission is to build and maintain public trust and confidence in the securities markets. At its core: Commitment to Clarity, a commitment to openness and understanding as the guiding principles for all interactions between investors and the firms that serve them.SIA members (including investment banks, broker-dealers, and mutual fund companies) are active in all U.S. and foreign markets and in all phases of corporate and public finance. According to the Bureau of Labor Statistics, the U.S. securities industry employs nearly 800,000 individuals, and its personnel manage the accounts of nearly 93-million investors directly and indirectly through corporate, thrift, and pension plans. In 2004, the industry generated an estimated $227.5 billion in domestic revenue and $305 billion in global revenues. (More information about SIA is available at: www.sia.com.)
