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CAPCO is an
insurance company licensed by the state of Vermont.
CAPCO provides protection for only institutional and individual
clients' securities accounts of Lehman Brothers Inc. and Lehman Brothers International (Europe) over and above
that provided, in the UK, by the Financial Services
Compensation Scheme (“FSCS”) and,
in the US, the Securities Investor Protection
Act (“SIPA”) which is administered
by the Securities Investor Protection Corporation
(“SIPC”).
The protection offered by the CAPCO Surety Bond
is similar to the protection that has previously
been available from the domestic United States
insurance market, known as Excess SIPC protection.
The securities
broker/dealer referred to as the “Principal”
in the CAPCO Excess FSCS Surety Bond issued
to that Principal (the “Bond”) may
also be referred to as the “Insured”
under the Bond. But it is the “Investors”
(as clients of the Principal are defined in
the Bond) using the Principal, rather than the
Principal itself, who are the beneficiaries
of CAPCO’s payment obligations under the
Bond. Because insolvency proceedings were commenced prior to expiration of the Bonds with regard only to Lehman Brothers Inc. and Lehman Brothers International (Europe), only customers of those firms may be beneficiaries under the Bonds. The coverage of the Bond is described
in more detail in the sections below.
Under the
Bond, a Customer is a client of the Firm who satisfies the
definition of "Customer" set forth
in section 78lll(2) of the SIPA.
Yes, subject
to the terms and conditions generally applicable
to Investors.
No, all Investors with Lehman Brothers Inc. and Lehman Brothers International (Europe) are eligible for coverage
under the Bond, subject to its terms. However,
the protection does not apply to all losses.
For example, it does not apply to any loss that
arises directly or indirectly through fraudulent,
dishonest, or wrongful acts on the part of the
Investor, or through any such act to which the
Investor has contributed, or any claim which
has been rejected by the FSCS or an insolvency
practitioner.
Yes. Although
the FSCS provides coverage for a wide range
of products and will also compensate Investors
for certain of the Principal’s liabilities
(such as negligence) in certain circumstances,
the Bond covers only lost cash and securities.
Yes. If any
rules affecting the payment of compensation
by the FSCS are altered so as to affect the
protection afforded by the Bond, CAPCO has the
option of accepting the alterations, renegotiating
the Bond with the Principal, or cancelling the
Bond upon 90 days’ notice to the Principal.
See www.fscs.org.uk
for information regarding the FSCS.
The Investor
should follow the claims submission procedures
specified in CAPCO's Surety Bond Claim Form,
a copy of which is provided on the CAPCO website
www.capcoexcess.com.
Claims under the Bond may
be submitted as late as six months after the
date upon which the final dividend/ distribution
of all the Principal’s assets has been
declared by the Practitioner.
NOTE: Nothing
contained in this document is to be read as
a representation, term or warranty by CAPCO.
This document is intended to provide a broad
overview for investors and is not intended to
bind CAPCO in any way. For full terms of coverage,
you are referred to the wording of the Bond
a copy of which is available on CAPCO’s
website: www.capcoexcess.com.
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What is the Customer Asset Protection Company
(CAPCO)?