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18(2) The interest of a debtor in an uncertificated security may be reached by a
19creditor only by legal process upon the issuer at its chief executive office in the United
20States, except as otherwise provided in sub. (4).
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21(3) The interest of a debtor in a security entitlement may be reached by a
22creditor only by legal process upon the securities intermediary with whom the
23debtor's securities account is maintained, except as otherwise provided in sub. (4).
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24(4) The interest of a debtor in a certificated security for which the certificate
25is in the possession of a secured party, or in an uncertificated security registered in
1the name of a secured party, or a security entitlement maintained in the name of a
2secured party, may be reached by a creditor by legal process upon the secured party.
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3(5) A creditor whose debtor is the owner of a certificated security, uncertificated
4security or security entitlement is entitled to aid from a court of competent
5jurisdiction, by injunction or otherwise, in reaching the certificated security,
6uncertificated security or security entitlement or in satisfying the claim by means
7allowed at law or in equity in regard to property that cannot readily be reached by
8other legal process.
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9408.113 Statute of frauds inapplicable. A contract or modification of a
10contract for the sale or purchase of a security is enforceable whether or not there is
11a writing signed or record authenticated by a party against whom enforcement is
12sought, even if the contract or modification is not capable of performance within one
13year of its making.
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14408.114 Evidentiary rules concerning certificated securities. The
15following rules apply in an action on a certificated security against the issuer:
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16(1) Unless specifically denied in the pleadings, each signature on a security
17certificate or in a necessary endorsement is admitted.
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18(2) If the effectiveness of a signature is put in issue, the burden of establishing
19effectiveness is on the party claiming under the signature, but the signature is
20presumed to be genuine or authorized.
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21(3) If signatures on a security certificate are admitted or established,
22production of the certificate entitles a holder to recover on it unless the defendant
23establishes a defense or a defect going to the validity of the security.
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1(4) If it is shown that a defense or defect exists, the plaintiff has the burden of
2establishing that the plaintiff or some person under whom the plaintiff claims is a
3person against whom the defense or defect cannot be asserted.
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4408.115 Securities intermediary and others not liable to adverse
5claimant. A securities intermediary that has transferred a financial asset pursuant
6to an effective entitlement order, or a broker or other agent or bailee that has dealt
7with a financial asset at the direction of its customer or principal, is not liable to a
8person having an adverse claim to the financial asset, unless the securities
9intermediary, or broker or other agent or bailee:
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10(1) Took the action after it had been served with an injunction, restraining
11order, or other legal process enjoining it from doing so, issued by a court of competent
12jurisdiction, and had a reasonable opportunity to act on the injunction, restraining
13order or other legal process; or
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14(2) Acted in collusion with the wrongdoer in violating the rights of the adverse
15claimant; or
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16(3) In the case of a security certificate that has been stolen, acted with notice
17of the adverse claim.
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18408.116 Securities intermediary as purchaser for value. A securities
19intermediary that receives a financial asset and establishes a security entitlement
20to the financial asset in favor of an entitlement holder is a purchaser for value of the
21financial asset. A securities intermediary that acquires a security entitlement to a
22financial asset from another securities intermediary acquires the security
23entitlement for value if the securities intermediary acquiring the security
24entitlement establishes a security entitlement to the financial asset in favor of an
25entitlement holder.
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1Subchapter II
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Issue and Issuer
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3408.201 Issuer. (1) With respect to an obligation on or a defense to a security,
4an "issuer" includes a person that:
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(a) Places or authorizes the placing of its name on a security certificate, other
6than as authenticating trustee, registrar, transfer agent or the like, to evidence a
7share, participation or other interest in its property or in an enterprise, or to evidence
8its duty to perform an obligation represented by the certificate;
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(b) Creates a share, participation or other interest in its property or in an
10enterprise, or undertakes an obligation, that is an uncertificated security;
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(c) Directly or indirectly creates a fractional interest in its rights or property,
12if the fractional interest is represented by a security certificate; or
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(d) Becomes responsible for, or in place of, another person described as an issuer
14in this section.
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15(2) With respect to an obligation on or defense to a security, a guarantor is an
16issuer to the extent of its guaranty, whether or not its obligation is noted on a security
17certificate.
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18(3) With respect to a registration of a transfer, "issuer" means a person on
19whose behalf transfer books are maintained.
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20408.202 Issuer's responsibility and defenses; notice of defect or
21defense. (1) Even against a purchaser for value and without notice, the terms of
22a certificated security include terms stated on the certificate and terms made part
23of the security by reference on the certificate to another instrument, indenture or
24document or to a constitution, statute, ordinance, rule, regulation, order or the like,
25to the extent that the terms referred to do not conflict with terms stated on the
1certificate. A reference under this subsection does not of itself charge a purchaser
2for value with notice of a defect going to the validity of the security, even if the
3certificate expressly states that a person accepting it admits notice. The terms of an
4uncertificated security include those stated in any instrument, indenture or
5document or in a constitution, statute, ordinance, rule, regulation, order or the like,
6pursuant to which the security is issued.
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7(2) The following rules apply if an issuer asserts that a security is not valid:
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(a) A security other than one issued by a government or governmental
9subdivision, agency or instrumentality, even though issued with a defect going to its
10validity, is valid in the hands of a purchaser for value and without notice of the
11particular defect unless the defect involves a violation of a constitutional provision.
12In that case, the security is valid in the hands of a purchaser for value and without
13notice of the defect, other than one who takes by original issue.
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(b) Paragraph (a) applies to an issuer that is a government or governmental
15subdivision, agency or instrumentality only if there has been substantial compliance
16with the legal requirements governing the issue or the issuer has received a
17substantial consideration for the issue as a whole or for the particular security and
18a stated purpose of the issue is one for which the issuer has power to borrow money
19or issue the security.
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20(3) Except as otherwise provided in s. 408.205, lack of genuineness of a
21certificated security is a complete defense, even against a purchaser for value and
22without notice.
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23(4) All other defenses of the issuer of a security, including nondelivery and
24conditional delivery of a certificated security, are ineffective against a purchaser for
1value who has taken the certificated security without notice of the particular
2defense.
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3(5) This section does not affect the right of a party to cancel a contract for a
4security "when, as and if issued" or "when distributed" in the event of a material
5change in the character of the security that is the subject of the contract or in the plan
6or arrangement pursuant to which the security is to be issued or distributed.
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7(6) If a security is held by a securities intermediary against whom an
8entitlement holder has a security entitlement with respect to the security, the issuer
9may not assert any defense that the issuer could not assert if the entitlement holder
10held the security directly.
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11408.203 Staleness as notice of defect or defense. After an act or event,
12other than a call that has been revoked, creating a right to immediate performance
13of the principal obligation represented by a certificated security or setting a date on
14or after which the security is to be presented or surrendered for redemption or
15exchange, a purchaser is charged with notice of any defect in its issue or defense of
16the issuer, if the act or event:
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17(1) Requires the payment of money, the delivery of a certificated security, the
18registration of transfer of an uncertificated security, or any of them on presentation
19or surrender of the security certificate, the money or security is available on the date
20set for payment or exchange, and the purchaser takes the security more than one
21year after that date; or
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22(2) Is not covered by sub. (1) and the purchaser takes the security more than
232 years after the date set for surrender or presentation or the date on which
24performance became due.
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1408.204 Effect of issuer's restriction on transfer. A restriction on the
2transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective
3against a person without knowledge of the restriction unless:
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4(1) The security is certificated and the restriction is noted conspicuously on the
5security certificate; or
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6(2) The security is uncertificated and the registered owner has been notified
7of the restriction.
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8408.205 Effect of unauthorized signature on security certificate. An
9unauthorized signature placed on a security certificate before or in the course of issue
10is ineffective, but the signature is effective in favor of a purchaser for value of the
11certificated security if the purchaser is without notice of the lack of authority and the
12signing has been done by:
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13(1) An authenticating trustee, registrar, transfer agent or other person
14entrusted by the issuer with the signing of the security certificate or of similar
15security certificates, or the immediate preparation for signing of any of them; or
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16(2) An employe of the issuer, or of any of the persons listed in sub. (1), entrusted
17with responsible handling of the security certificate.
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18408.206 Completion or alteration of security certificate. (1) If a security
19certificate contains the signatures necessary to its issue or transfer but is incomplete
20in any other respect:
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(a) Any person may complete it by filling in the blanks as authorized; and
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(b) Even if the blanks are incorrectly filled in, the security certificate as
23completed is enforceable by a purchaser who took it for value and without notice of
24the incorrectness.
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1(2) A complete security certificate that has been improperly altered, even if
2fraudulently, remains enforceable, but only according to its original terms.
SB308,31,8
3408.207 Rights and duties of issuer with respect to registered owners.
4(1) Before due presentment for registration of transfer of a certificated security in
5registered form or of an instruction requesting registration of transfer of an
6uncertificated security, the issuer or indenture trustee may treat the registered
7owner as the person exclusively entitled to vote, receive notifications, and otherwise
8exercise all the rights and powers of an owner.
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9(2) This chapter does not affect the liability of the registered owner of a security
10for a call, assessment or the like.
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11408.208 Effect of signature of authenticating trustee, registrar or
12transfer agent. (1) A person signing a security certificate as authenticating
13trustee, registrar, transfer agent or the like, warrants to a purchaser for value of the
14certificated security, if the purchaser is without notice of a particular defect, that:
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(a) The certificate is genuine;
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(b) The person's own participation in the issue of the security is within the
17person's capacity and within the scope of the authority received by the person from
18the issuer; and
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(c) The person has reasonable grounds to believe that the certificated security
20is in the form and within the amount that the issuer is authorized to issue.
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21(2) Unless otherwise agreed, a person signing under sub. (1) does not assume
22responsibility for the validity of the security in other respects.
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23408.209 Issuer's lien. A lien in favor of an issuer upon a certificated security
24is valid against a purchaser only if the right of the issuer to the lien is noted
25conspicuously on the security certificate.
SB308,32,3
1408.210 Overissue. (1) In this chapter, "overissue" means the issue of
2securities in excess of the amount that the issuer has corporate power to issue, but
3an overissue does not occur if appropriate action has cured the overissue.
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4(2) Except as otherwise provided in subs. (3) and (4), the provisions of this
5chapter which validate a security or compel its issue or reissue do not apply to the
6extent that validation, issue or reissue would result in overissue.
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7(3) If an identical security not constituting an overissue is reasonably available
8for purchase, a person entitled to issue or validation may compel the issuer to
9purchase the security and deliver it if certificated or register its transfer if
10uncertificated, against surrender of any security certificate the person holds.
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11(4) If a security is not reasonably available for purchase, a person entitled to
12issue or validation may recover from the issuer the price that the person or the last
13purchaser for value paid for it with interest from the date of the person's demand.
SB308,32,1414
SUBCHAPTER III
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Transfer of certificated and
16
uncertificated securities
SB308,32,18
17408.301 Delivery. (1) Delivery of a certificated security to a purchaser occurs
18when:
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(a) The purchaser acquires possession of the security certificate;
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(b) Another person, other than a securities intermediary, either acquires
21possession of the security certificate on behalf of the purchaser or, having previously
22acquired possession of the certificate, acknowledges that it holds for the purchaser;
23or
SB308,33,3
1(c) A securities intermediary acting on behalf of the purchaser acquires
2possession of the security certificate, only if the certificate is in registered form and
3has been specially endorsed to the purchaser by an effective endorsement.
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4(2) Delivery of an uncertificated security to a purchaser occurs when:
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(a) The issuer registers the purchaser as the registered owner, upon original
6issue or registration of transfer; or
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(b) Another person, other than a securities intermediary, either becomes the
8registered owner of the uncertificated security on behalf of the purchaser or, having
9previously become the registered owner, acknowledges that it holds for the
10purchaser.
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11408.302 Rights of purchaser. (1) Except as otherwise provided in subs. (2)
12and (3), upon delivery of a certificated or uncertificated security to a purchaser, the
13purchaser acquires all rights in the security that the transferor had or had power to
14transfer.
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15(2) A purchaser of a limited interest acquires rights only to the extent of the
16interest purchased.
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17(3) A purchaser of a certificated security who as a previous holder had notice
18of an adverse claim does not improve its position by taking from a protected
19purchaser.
SB308,33,22
20408.303 Protected purchaser. (1) In this chapter, "protected purchaser"
21means a purchaser of a certificated or uncertificated security, or of an interest
22therein, who:
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(a) Gives value;
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(b) Does not have notice of any adverse claim to the security; and
SB308,33,2525
(c) Obtains control of the certificated or uncertificated security.
SB308,34,2
1(2) In addition to acquiring the rights of a purchaser, a protected purchaser also
2acquires its interest in the security free of any adverse claim.
SB308,34,6
3408.304 Endorsement. (1) An endorsement may be in blank or special. An
4endorsement in blank includes an endorsement to bearer. A special endorsement
5specifies to whom a security is to be transferred or who has power to transfer it. A
6holder may convert a blank endorsement to a special endorsement.
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7(2) An endorsement purporting to be only an endorsement of part of a security
8certificate representing units intended by the issuer to be separately transferable is
9effective to the extent of the endorsement.
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10(3) An endorsement, whether special or in blank, does not constitute a transfer
11until delivery of the certificate on which it appears or, if the endorsement is on a
12separate document, until delivery of both the document and the certificate.
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13(4) If a security certificate in registered form has been delivered to a purchaser
14without a necessary endorsement, the purchaser may become a protected purchaser
15only when the endorsement is supplied. However, against a transferor, a transfer is
16complete upon delivery and the purchaser has a specifically enforceable right to have
17any necessary endorsement supplied.
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18(5) An endorsement of a security certificate in bearer form may give notice of
19an adverse claim to the certificate, but it does not otherwise affect a right to
20registration that the holder possesses.
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21(6) Unless otherwise agreed, a person making an endorsement assumes only
22the obligations provided in s. 408.108 and not an obligation that the security will be
23honored by the issuer.
SB308,35,2
24408.305 Instruction. (1) If an instruction has been originated by an
25appropriate person but is incomplete in any other respect, any person may complete
1it as authorized and the issuer may rely on it as completed, even though it has been
2completed incorrectly.
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3(2) Unless otherwise agreed, a person initiating an instruction assumes only
4the obligations imposed by s. 408.108 and not an obligation that the security will be
5honored by the issuer.
SB308,35,8
6408.306 Effect of guaranteeing signature, endorsement or instruction.
7(1) A person who guarantees a signature of an endorser of a security certificate
8warrants that at the time of signing:
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(a) The signature was genuine;
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(b) The signer was an appropriate person to endorse, or, if the signature is by
11an agent, the agent had actual authority to act on behalf of the appropriate person;
12and
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(c) The signer had legal capacity to sign.
SB308,35,15
14(2) A person who guarantees a signature of the originator of an instruction
15warrants that at the time of signing:
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(a) The signature was genuine;
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(b) The signer was an appropriate person to originate the instruction, or, if the
18signature is by an agent, the agent had actual authority to act on behalf of the
19appropriate person, if the person specified in the instruction as the registered owner
20was, in fact, the registered owner, as to which fact the signature guarantor does not
21make a warranty; and