Question 1

What is an SEC Receiver?

Accepted Answer

A receiver is a neutral third-party custodian appointed by the court to act as an officer through the recommendation of the SEC. The SEC recommends receivers in fraud cases to protect assets from being squandered, hidden, or wasted. A court-appointed receiver has powers including taking legal control of assets, filing claims on behalf of an entity in receivership, and distributing assets to defrauded investors through a court-approved plan.

Question 2

Who Designates the SEC Receiver?

Accepted Answer

The federal district court judge handling the SEC receivership case appoints the receiver based on the SEC application or petition. The SEC generally provides names of qualified candidates to the court. Receivers are independent custodians — they are not SEC employees and report directly to the judge, not the SEC.

Question 3

What is the Scope of the Receiver's Authority?

Accepted Answer

A SEC receiver's authority is broad with respect to the company's assets, provided that it is within their fiduciary duties. Such general power includes the ability to sue on behalf of the receivership and gather, manage and liquidate receivership assets on behalf of potential creditors and harmed investors.

Question 4

How are Court-Appointed Receivers Compensated?

Accepted Answer

Upon the court's approval, a court-appointed receiver is paid from the assets of the receivership estate for reasonable compensation for their services, along with any costs and expenses incurred. The receiver must submit an itemized report and the court determines the final amount.

Question 5

How Would I Know If a Court-Appointed Receiver is Assigned in My Case?

Accepted Answer

Generally, the court-appointed receiver will reach out to you with specific instructions. You can also check the SEC page under Information for Harmed Investor, the court's website, or the receiver's website to see if a receiver has been assigned.

Question 6

How Are Company Assets Handled in an SEC Receivership?

Accepted Answer

The court-appointed receiver acts as guardian of the receivership estate and develops a plan for distributing assets to injured investors. Courts generally favor a proportionate approach based on net losses, but can choose whatever allocation plan they deem appropriate. The court must approve the distribution plan before any payments are made.

Question 7

What Should I Do If I Am Entitled to Receivership Assets?

Accepted Answer

If a court-appointed receiver has contacted you as a potential claimant, read the notification carefully. It will include instructions for submitting claim forms (by mail or online), deadlines, and required documentation such as the amount you invested and proof of your claim. Missing the claim deadline will likely result in denial of your claim.

What Investors Need to Know About SEC Receivers

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