§8-1503. Property interest of entitlement holder in financial asset held by securities intermediary
(1).
To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular
financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary
for the entitlement holders, are not property of the securities intermediary and are not subject to claims of creditors of
the securities intermediary, except as otherwise provided in section 8-1511.
[
1997, c. 429, Pt. B, §2 (NEW)
.]
(2).
An entitlement holder's property interest with respect to a particular financial asset under subsection (1) is a pro rata
property interest in all interests in that financial asset held by the securities intermediary, without regard to the time
the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in
that financial asset.
[
1997, c. 429, Pt. B, §2 (NEW)
.]
(3).
An entitlement holder's property interest with respect to a particular financial asset under subsection (1) may be enforced
against the securities intermediary only by exercise of the entitlement holder's rights under sections 8-1505 to 8-1508.
[
1997, c. 429, Pt. B, §2 (NEW)
.]
(4).
An entitlement holder's property interest with respect to a particular financial asset under subsection (1) may be enforced
against a purchaser of the financial asset or interest in the financial asset only if:
(a). Insolvency proceedings have been initiated by or against the securities intermediary; [1997, c. 429, Pt. B, §2 (NEW).]
(b). The securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements
of all of its entitlement holders to that financial asset; [1997, c. 429, Pt. B, §2 (NEW).]
(c). The securities intermediary violated its obligations under section 8-1504 by transferring the financial asset or interest
in the financial asset to the purchaser; and [1997, c. 429, Pt. B, §2 (NEW).]
(d). The purchaser is not protected under subsection (5). The trustee or other liquidator, acting on behalf of all entitlement
holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest
in the financial asset, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement
holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the
purchaser. [1997, c. 429, Pt. B, §2 (NEW).]
[
1997, c. 429, Pt. B, §2 (NEW)
.]
(5).
An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection
(1), whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against
any purchaser of a financial asset or interest in a financial asset who gives value, obtains control and does not act in collusion
with the securities intermediary in violating the securities intermediary's obligations under section 8-1504.
[
1997, c. 429, Pt. B, §2 (NEW)
.]
SECTION HISTORY
1997, c. 429, §B2 (NEW).
Data for this page extracted on 10/16/2012 08:20:53.