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HB 5849

AN ACT CONCERNING THE PRIORITY OF CLAIMS TO FINANCIAL ASSETS OF SECURITIES INTERMEDIARIES.

2025 Regular Session Introduced by Tom Delnicki and 1 co-sponsor

HB 5849 restructures claim priority rules for insolvent Connecticut securities intermediaries, potentially shifting which creditors recover funds during financial failures.

PUBLIC HEARING 0227
#securities #uniformcommercialcode
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Bill Summary · HB 5849

Legislative bill overview

HB 5849 modifies Connecticut law regarding how claims are prioritized when a securities intermediary (broker, bank, or custodian) becomes insolvent or bankrupt. The bill establishes a new hierarchy for which creditors and customers get paid first from the intermediary's remaining financial assets. This is a technical update to state securities law that aligns with how customer accounts are protected during financial institution failures.

Why is this important

When a brokerage or financial institution fails, the order in which claims are paid determines whether customers recover their investments or lose money. This bill directly affects how much protection ordinary investors receive and can influence market confidence in financial institutions. The change also affects institutional creditors, banks, and other parties with claims against failed securities intermediaries.

Potential points of contention

  • Customer protection vs. creditor rights: The bill may prioritize certain creditors (like banks owed settlement fees) differently than retail investors' accounts, raising fairness questions about who bears losses
  • Alignment with federal law: Securities intermediaries are also regulated federally; unclear provisions could create conflicts between state and federal claim priorities
  • Scope ambiguity: The bill's language about which entities qualify as "securities intermediaries" and which assets are covered may be contested by different industry sectors

Compiled from official sources — confirm details with the bill’s official record.

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