The opinion of the court was delivered by: POLLACK
MEMORANDUM ON FEE APPLICATIONS
MILTON POLLACK, District Judge.
The Trustee and counsel have applied for final fee allowances for their services in connection with the liquidation of a brokerage firm pursuant to the Securities Investor Protection Act of 1970, 15 U.S.C. §§ 78aaa et seq. (SIPA hereafter). Kenneth Bruce & Co., the broker-dealer, was taken over for liquidation in 1972. William W. Golub, Esq. was named Temporary Receiver on May 25 of that year, and Trustee on August 17. In due course, the law firm of Rosenman Colin Freund Lewis & Cohen* was named as Trustee's counsel. Golub is a senior partner of the Rosenman firm. In addition, Touche Ross & Co. were appointed to be the Trustee's accountants.
The fees sought total $460,000: $104,000 for the Trustee and $356,000 for his law firm. Counsel also seeks $12,882.09 as reimbursement for expenses. The applicants heretofore have received $150,000 on account of the final allowances to be made herein: $35,000 for the Trustee and $115,000 for his attorneys.
The Securities Investor Protection Corporation (SIPC hereafter) has filed affidavits of its General Counsel stating that in the agency's opinion, the fees requested are reasonable. SIPC will furnish sufficient funds to permit payment of such allowances as this Court might award.
The clear intent of SIPA is to make section 241 of the Bankruptcy Act, 11 U.S.C. § 641, applicable to fee allowances in brokerage liquidations. See 15 U.S.C. § 78fff(c)(1). That section provides that "the judge may allow . . . reasonable compensation for services rendered . . . in a proceeding under this chapter . . . by the trustee and . . . [his] attorneys." Section 241 also specifically makes inapplicable section 48 of the Bankruptcy Act, 11 U.S.C. § 76, which governs the trustee's compensation in straight bankruptcies. Thus, as in Chapter X reorganizations and unlike straight bankruptcies, rigid economy is not the primary criterion for fee allowances in SIPC liquidations. At the same time, the Court must be careful to avoid permitting a brokerage liquidation to be turned into an opportunity for vicarious generosity at the expense of a stricken entity, or of the brokerage community which supports SIPC. SIPC v. Charisma Securities Corp., 352 F. Supp. 302, 306 (S.D.N.Y. 1972).
Kenneth Bove & Co., Inc., a stockbrokerage organization, had its principal office at 42 Broadway, New York City. It also had five branch offices: two in New York City, and one in each of Boston, Los Angeles and Miami. The organization employed about 155 employees, and held approximately 7,000 customers' accounts. Assets subject to administration, including money advanced by SIPC, totalled about $6,000,000. Securities worth nearly $3,500,000 and almost $912,000 in cash were distributed to Bove's customers.
William Golub has been a member of the New York Bar for approximately forty years. He has extensive experience with respect to securities, reorganizations and bankruptcies: he served as trustee in another broker-dealer liquidation under SIPA, and as counsel to trustees and receivers in other insolvency proceedings. He acts as the attorney in charge of the Rosenman firm in such matters, and is recognized as one of the leading members of the bar in his field. His appointment as Trustee no doubt was based on the legal expertise which he was expected to, and did, employ, and his fee application certainly requests compensation for services beyond caretaking and responsibility for the assets.
Following his appointment, the Trustee took possession of the enterprise for liquidation, inventoried its assets, and took the necessary steps to discontinue its business. He established communications with customers and issued statements of their accounts. He took possession of securities on hand and invested available cash. Appraisals were arranged, and the debtor's tangible property was sold.
The Trustee engaged a permanent staff of eight of Bove's employees, as well as additional full time employees to expedite the transfer and delivery of securities, with SIPC's advance authorization and approval. He also hired temporary personnel from time to time to perform various clerical tasks. The accountants collated and prepared the requisite financial information relating to the estate, segregating assets into appropriate categories and making the necessary calculations and summaries. The resulting statements were not audited. For these services, the accountants have been paid a total of $307,188.05.
To detail the services performed by the Trustee, as set out at length in his initial 1975 fee application, would unnecessarily expand this review. Suffice it to say that he maintained close control of the liquidation and did whatever needed to be done. He attended at Bove's offices two or three days a week, was in daily communication with his office manager there, and conferred with his office staff and accountants at least once a week. A major time-consuming duty was to receive and respond to an endless ...