Mass. Fin. Servs., Inc. v. Sec. Inv'r Prot. Corp.

545 F.2d 754 (1st Cir. 1976)



A court will resort to the legislative history and other aids of statutory construction only when the literal words of the statute create ambiguity or lead to an unreasonable interpretation.


The securities protection corporation (SPC) had the power to assess fees against its members, all securities brokers and dealers.  In an action by the SPC, the district court held that a financial service company was not a member of the corporation. The court held that the financial service was specifically exempted as persons whose business as a broker or dealer consisted exclusively of the distribution of mutual fund shares. 


Is the financial services company a member of the federally created Securities Investor Protection Corp. ("SIPC")?




In the present case, the court held not only that the language of § 78ccc(a)(2) is clear but also that it produces a result which is neither absurd, unreasonable, nor at variance with the policy of SIPA. The court cannot say that these exemptions as drafted are absurd or unreasonable on their face or as applied, nor that their presence in the act is necessarily incompatible with the overall scheme of SIPA. Accordingly, it agreed with the district court that the words "whose business as a broker or dealer" are to be given their ordinary meaning. As a result of this reading of the statute, it is clear that the company is exempted from membership in SIPC since it is conceded that all of its activity as a broker-dealer is statutorily exempted.

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