Under 11 USC 548, a bankruptcy trustee may set aside certain fraudulent transfers for the benefit of the bankrupt estate.  But 11 USC 546(e) limits those avoidance powers, providing that the trustee may not set aside a settlement payment from or to a financial institution in connection with a securities contract.  This decision holds that in determining whether a transaction falls within that limitation, the court must focus on the transaction that the trustee seeks to set aside, not the intermediate transactions that effectuated the ultimate transaction that the trustee challenges.  Here, the trustee sought to set aside a sale of one corporation’s securities to the debtor corporation.  That transaction involved no financial institution and so was not shielded from the trustee’s avoidance powers, even though wire transfers of the funds to purchase those shares may have been transmitted from or to various financial institutions.

U.S. Supreme Court (Sotomayor, J.); February 27, 2018; 2018 WL 1054879.