A stockbroker, in the context of bankruptcy, is defined as a person or entity that engages in the business of executing transactions in securities on behalf of others or for their own account. This definition is rooted in the Federal Bankruptcy Code, which highlights the role of stockbrokers in managing customer accounts and facilitating trades in the financial markets.
The term "stockbroker" is commonly used in legal contexts related to bankruptcy, particularly when assessing the financial obligations of individuals or entities undergoing bankruptcy proceedings. Stockbrokers may be involved in the liquidation of securities and the distribution of assets to creditors. Legal areas that may intersect with stockbroker activities include:
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Here are a couple of examples of abatement:
Example 1: A stockbroker manages a portfolio for a client who files for bankruptcy. The stockbroker must assess the value of the client's securities and determine how to liquidate them to pay off debts.
Example 2: A brokerage firm faces bankruptcy and must navigate the distribution of its assets, including client accounts and securities held for customers. (hypothetical example)
The primary statute governing stockbrokers in bankruptcy is the Federal Bankruptcy Code, particularly:
| Term | Definition | Key Differences |
|---|---|---|
| Broker-Dealer | A firm or individual that buys and sells securities on behalf of clients. | A broker-dealer may also provide investment advice, while a stockbroker primarily executes trades. |
| Investment Advisor | A professional who provides advice on securities and investment strategies. | Investment advisors typically focus on providing advice rather than executing trades. |
If you find yourself dealing with issues related to stockbrokers and bankruptcy, consider the following steps:
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A stockbroker helps manage and liquidate securities to pay off debts during bankruptcy proceedings.