(a) Rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise; and
(b) Rights of the securities intermediary under any other law, regulation, rule or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
(4) Sections 408.504 to 408.508 do not require a securities intermediary to take any action that is prohibited by any other statute, regulation or rule.
408.510 Rights of purchaser of security entitlement from entitlement holder. (1) An action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim and obtains control.
(2) If an adverse claim could not have been asserted against an entitlement holder under s. 408.502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.
(3) In a case not covered by the priority rules in ch. 409, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. Purchasers who have control rank equally, except that a securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.
408.511 Priority among security interests and entitlement holders. (1) Except as otherwise provided in subs. (2) and (3), if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.
(2) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary's entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset.
(3) If a clearing corporation does not have sufficient financial assets to satisfy both its obligations to entitlement holders who have security entitlements with respect to a financial asset and its obligation to a creditor of the clearing corporation who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders.
subchapter VI
Transitional provisions
408.603 Saving provision. (1) If a security interest in a security is perfected on or before the effective date of this subsection .... [revisor inserts date], and the action by which the security interest was perfected would suffice to perfect a security interest under this chapter, no further action is required to continue perfection.
(2) If a security interest in a security is perfected on or before the effective date of this subsection .... [revisor inserts date], under ch. 408, 1995 stats., but the action by which the security interest was perfected would not suffice to perfect a security interest under this chapter, the security interest remains perfected for a period of 4 months after the effective date of this subsection .... [revisor inserts date], and continues perfected thereafter if appropriate action to perfect under this chapter is taken within that period. If a security interest is perfected on or before the effective date of this subsection .... [revisor inserts date], and the security interest can be perfected by filing under this chapter, a financing statement signed by the secured party instead of the debtor may be filed within that period to continue perfection or thereafter to perfect.
297,9
Section 9
. 409.103 (6) of the statutes is repealed and recreated to read:
409.103 (6) Investment property. (a) This subsection applies to investment property.
(b) Except as otherwise provided in par. (f), during the time that a security certificate is located in a jurisdiction, perfection of a security interest, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby are governed by the local law of that jurisdiction.
(c) Except as otherwise provided in par. (f), perfection of a security interest, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security are governed by the local law of the issuer's jurisdiction as specified in s. 408.110 (4).
(d) Except as otherwise provided in par. (f), perfection of a security interest, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account are governed by the local law of the securities intermediary's jurisdiction as specified in s. 408.110 (5).
(e) Except as otherwise provided in par. (f), perfection of a security interest, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account are governed by the local law of the commodity intermediary's jurisdiction. The following rules determine a “commodity intermediary's jurisdiction" for purposes of this paragraph:
1. If an agreement between the commodity intermediary and commodity customer specifies that it is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
2. If an agreement between the commodity intermediary and commodity customer does not specify the governing law as provided in subd. 1., but expressly specifies that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
3. If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subd. 1. or 2., the commodity intermediary's jurisdiction is the jurisdiction in which is located the office identified in an account statement as the office serving the commodity customer's account.
4. If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subd. 1. or 2. and an account statement does not identify an office serving the commodity customer's account as provided in subd. 3., the commodity intermediary's jurisdiction is the jurisdiction in which is located the chief executive office of the commodity intermediary.
(f) Perfection of a security interest by filing, automatic perfection of a security interest in investment property granted by a broker or securities intermediary, and automatic perfection of a security interest in a commodity contract or commodity account granted by a commodity intermediary are governed by the local law of the jurisdiction in which the debtor is located.
297,10
Section 10
. 409.105 (1) (h) of the statutes is amended to read:
409.105 (1) (h) “Goods" includes all things which are movable at the time the security interest attaches or which are fixtures (s. 409.313), but does not include money, documents, instruments, investment property, accounts, chattel paper, general intangibles or minerals or the like (including oil and gas) before extraction. “Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals and growing crops.
297,11
Section 11
. 409.105 (1) (i) of the statutes is amended to read:
409.105 (1) (i) “Instrument" means a negotiable instrument as defined in s. 403.104 or a certificated security as defined in s. 408.102 or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment.
297,12
Section 12
. 409.105 (2) (an) of the statutes is created to read:
409.105 (2) (an) “Commodity contract" — s. 409.115 (1) (b).
297,13
Section 13
. 409.105 (2) (ap) of the statutes is created to read:
409.105 (2) (ap) “Commodity customer" — s. 409.115 (1) (c).
297,14
Section 14
. 409.105 (2) (aq) of the statutes is created to read:
409.105 (2) (aq) “Commodity intermediary" — s. 409.115 (1) (d).
297,15
Section 15
. 409.105 (2) (cb) of the statutes is created to read:
409.105 (2) (cb) “Control" — s. 409.115 (1) (e).
297,16
Section 16
. 409.105 (2) (gm) of the statutes is created to read:
409.105 (2) (gm) “Investment property" — s. 409.115 (1) (f).
297,17
Section 17
. 409.105 (3) (a) of the statutes is renumbered 409.105 (3) (am).
297,18
Section 18
. 409.105 (3) (ac) of the statutes is created to read:
409.105 (3) (ac) “Broker" — s. 408.102 (1) (c).
297,19
Section 19
. 409.105 (3) (ag) of the statutes is created to read:
409.105 (3) (ag) “Certificated security" — s. 408.102 (1) (d).
297,20
Section 20
. 409.105 (3) (as) of the statutes is created to read:
409.105 (3) (as) “Clearing corporation" — s. 408.102 (1) (e).
297,21
Section 21
. 409.105 (3) (bh) of the statutes is created to read:
409.105 (3) (bh) “Delivery" — s. 408.301.
297,22
Section 22
. 409.105 (3) (bp) of the statutes is created to read:
409.105 (3) (bp) “Entitlement holder" — s. 408.102 (1) (g).
297,23
Section 23
. 409.105 (3) (bt) of the statutes is created to read:
409.105 (3) (bt) “Financial asset" — s. 408.102 (1) (i).
297,24
Section 24
. 409.105 (3) (f) of the statutes is created to read:
409.105 (3) (f) “Securities intermediary" — s. 408.102 (1) (n).
297,25
Section 25
. 409.105 (3) (g) of the statutes is created to read:
409.105 (3) (g) “Security" — s. 408.102 (1) (o).
297,26
Section 26
. 409.105 (3) (h) of the statutes is created to read:
409.105 (3) (h) “Security certificate" — s. 408.102 (1) (p).
297,27
Section 27
. 409.105 (3) (i) of the statutes is created to read:
409.105 (3) (i) “Security entitlement" — s. 408.102 (1) (q).
297,28
Section 28
. 409.105 (3) (j) of the statutes is created to read:
409.105 (3) (j) “Uncertificated security" — s. 408.102 (1) (r).
297,29
Section 29
. 409.106 of the statutes is amended to read:
409.106 Definitions: “account"; “general intangibles". “Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. “General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments, investment property and money. All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.
297,30
Section 30
. 409.115 of the statutes is created to read:
409.115 Investment property. (1) In this chapter:
(a) “Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.
(b) “Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or other contract that, in each case, is:
1. Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws; or
2. Traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer.
(c) “Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books.
(d) “Commodity intermediary" means:
1. A person who is registered as a futures commission merchant under the federal commodities laws; or
2. A person who in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to the federal commodities laws.
(e) “Control" with respect to a certificated security, uncertificated security, or security entitlement has the meaning specified in s. 408.106. A secured party has control over a commodity contract if, by agreement among the commodity customer, the commodity intermediary, and the secured party, the commodity intermediary has agreed that it will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary as secured party has control. A secured party has control over a securities account or commodity account if the secured party has control over all security entitlements or commodity contracts carried in the securities account or commodity account.
(f) “Investment property" means:
1. A security, whether certificated or uncertificated;
2. A security entitlement;
3. A securities account;
4. A commodity contract; or
5. A commodity account.
(2) Attachment or perfection of a security interest in a securities account is also attachment or perfection of a security interest in all security entitlements carried in the securities account. Attachment or perfection of a security interest in a commodity account is also attachment or perfection of a security interest in all commodity contracts carried in the commodity account.
(3) A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract or commodity account whether it describes the collateral by those terms, or as investment property, or by description of the underlying security, financial asset or commodity contract. A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.
(4) Perfection of a security interest in investment property is governed by the following rules:
(a) A security interest in investment property may be perfected by control.
(b) Except as otherwise provided in pars. (c) and (d), a security interest in investment property may be perfected by filing.
(c) If the debtor is a broker or securities intermediary, a security interest in investment property is perfected when it attaches. The filing of a financing statement with respect to a security interest in investment property granted by a broker or securities intermediary has no effect for purposes of perfection or priority with respect to that security interest.
(d) If a debtor is a commodity intermediary, a security interest in a commodity contract or a commodity account is perfected when it attaches. The filing of a financing statement with respect to a security interest in a commodity contract or a commodity account granted by a commodity intermediary has no effect for purposes of perfection or priority with respect to that security interest.
(5) Priority between conflicting security interests in the same investment property is governed by the following rules:
(a) A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property.
