- The Washington Times - Sunday, December 7, 2003

Stephen P. Harbeck is helping investors reclaim stocks lost from bankrupt brokerage firms as head of the nonprofit, membership organization Securities Investor Protection Corp.

The D.C. organization, which is not a government agency or a regulatory authority, was chartered by Congress in 1970 to recover assets from failed or financially troubled brokerage firms.

All 7,000 brokerage firms licensed in the United States are required to become members with the group and pay membership fees that cover securities up to $500,000.

While it does not protect against investment fraud, SIPC has distributed $513 million to bankrupt firms from its inception through December 2001 and helped 622,000 investors.

Mr. Harbeck, 56, has been with the agency since 1975, when he joined the legal staff. He was promoted to general counsel in 1995 and now is taking over as president and chief executive officer. He replaces Michael Don, who retired in November.

In his broader role, Mr. Harbeck will oversee the operations of the agency’s 31 employees and the $1.24 billion budget the agency is required to have to cover investment crises.

He also works with independent, court-appointed trustees in fraud cases to recover funds for shareholders.

“The court appoints trustees to take over for returning assets and liquidating a firm, but those trustees look to us for guidance,” he said.

The agency handles on average eight investment firm bankruptcies annually. While most of the firms that fail are smaller operations, the agency has handled larger challenges, such as MJK Clearing.

The Minneapolis firm collapsed financially in September 2001, affecting stock portfolios of 175,000 customers. SIPC gave $177 million to trustees to return stocks to customers a week after MJK Clearing’s breakdown.

“That by far was our largest brokerage failure and it was a very trying time for consumers,” Mr. Harbeck said.

William Timken Jr., chairman for SIPC’s board of directors, said Mr. Harbeck will enhance the organization’s working relationship with the Securities and Exchange Commission, the main agency that protects investors and the securities markets.

“He has been directly responsible for ensuring that American investors understand the role of SIPC, and will oversee our expanded efforts in this vital area,” Mr. Timken said in a statement.

Mr. Harbeck said he plans to introduce more investment education programs in the coming months to help investors safeguard against stock fraud.

Mr. Harbeck lives in Mount Vernon with his wife, Judith.


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