LD 2245
pg. 487
Page 486 of 493 An Act to Adopt the Model Revised Article 9 Secured Transactions Page 488 of 493
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LR 1087
Item 1

 
3. Subsection (b) provides that the law of the securities
intermediary's jurisdiction governs the issues concerning the
indirect holding system that are dealt with in Article 8.
Paragraphs (1) and (2) cover the matters dealt with in the
Article 8 rules defining the concept of security entitlement and
specifying the duties of securities intermediaries. Paragraph
(3) provides that the law of the security intermediary's
jurisdiction determines whether the intermediary owes any duties
to an adverse claimant. Paragraph (4) provides that the law of
the security intermediary's jurisdiction determines whether
adverse claims can be asserted against entitlement holders and
others.

 
Subsection (e) determines what is a "securities intermediary's
jurisdiction." The policy of subsection (b) is to ensure that a
securities intermediary and all of its entitlement holders can
look to a single, readily-identifiable body of law to determine
their rights and duties. Accordingly, subsection (e) sets out a
sequential series of tests to facilitate identification of that
body of law. Paragraph (1) of subsection (e) permits
specification of the governing law securities intermediary's
jurisdiction by agreement. In the absence of such a
specification, the law chosen by the parties to govern the
securities account determines the securities intermediary's
jurisdiction.__See paragraph (2). Because the policy of this
section is to enable parties to determine, in advance and with
certainty, what law will apply to transactions governed by this
Article, the validation of the parties' selection of governing
law by agreement is not conditioned upon a determination that the
jurisdiction whose law is chosen bear a "reasonable relation" to
the transaction. See Section 4A-507; compare Section 1-105(1).
That is also true with respect to the similar provisions in
subsection (d) of this section and in Section 9103(6) 9-305
[Maine cite section 9-1305]. The remaining paragraphs in
subsection (e) contain additional default rules for determining
the securities intermediary's jurisdiction.

 
5. The following examples illustrate how a court in a
jurisdiction which has enacted this section would determine the
governing law:

 
Example 1. John Doe, a resident of Kansas, maintains a
securities account with Able & Co. Able is incorporated in
Delaware. Its chief executive offices are located in Illinois.
The office where Doe transacts business with Able is located in
Missouri. The agreement between Doe and Able specifies that it
is governed by Illinois law is the securities intermediary's
(Able's) jurisdiction. Through the account, Doe holds securities
of a Colorado corporation, which Able holds through Clearing
Corporation. The rules of Clearing Corporation provide that the


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