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10(3) An act or event that creates a right to immediate performance of the
11principal obligation represented by a security certificate or sets a date on or after
12which the certificate is to be presented or surrendered for redemption or exchange
13does not itself constitute notice of an adverse claim except in the case of a transfer
14more than:
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(a) One year after a date set for presentment or surrender for redemption or
16exchange; or
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(b) Six months after a date set for payment of money against presentation or
18surrender of the certificate, if money was available for payment on that date.
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19(4) A purchaser of a certificated security has notice of an adverse claim if the
20security certificate:
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(a) Whether in bearer or registered form, has been endorsed "for collection" or
22"for surrender" or for some other purpose not involving transfer; or
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(b) Is in bearer form and has on it an unambiguous statement that it is the
24property of a person other than the transferor, but the mere writing of a name on the
25certificate is not such a statement.
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1(5) Filing of a financing statement under ch. 409 is not notice of an adverse
2claim to a financial asset.
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3408.106 Control. (1) A purchaser has "control" of a certificated security in
4bearer form if the certificated security is delivered to the purchaser.
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5(2) A purchaser has "control" of a certificated security in registered form if the
6certificated security is delivered to the purchaser and:
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(a) The certificate is endorsed to the purchaser or in blank by an effective
8endorsement; or
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(b) The certificate is registered in the name of the purchaser, upon original
10issue or registration of transfer by the issuer.
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11(3) A purchaser has "control" of an uncertificated security if:
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(a) The uncertificated security is delivered to the purchaser; or
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(b) The issuer has agreed that it will comply with instructions originated by the
14purchaser without further consent by the registered owner.
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15(4) A purchaser has "control" of a security entitlement if:
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(a) The purchaser becomes the entitlement holder; or
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(b) The securities intermediary has agreed that it will comply with entitlement
18orders originated by the purchaser without further consent by the entitlement
19holder.
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20(5) If an interest in a security entitlement is granted by the entitlement holder
21to the entitlement holder's own securities intermediary, the securities intermediary
22has control.
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23(6) A purchaser who has satisfied the requirements of sub. (3) (b) or (4) (b) has
24control even if the registered owner in the case of sub. (3) (b) or the entitlement holder
25in the case of sub. (4) (b) retains the right to make substitutions for the uncertificated
1security or security entitlement, to originate instructions or entitlement orders to the
2issuer or securities intermediary or otherwise to deal with the uncertificated security
3or security entitlement.
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4(7) An issuer or a securities intermediary may not enter into an agreement of
5the kind described in sub. (3) (b) or (4) (b) without the consent of the registered owner
6or entitlement holder, but an issuer or a securities intermediary is not required to
7enter into such an agreement even though the registered owner or entitlement
8holder so directs. An issuer or securities intermediary that has entered into such an
9agreement is not required to confirm the existence of the agreement to another party
10unless requested to do so by the registered owner or entitlement holder.
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11408.107 Whether endorsement, instruction or entitlement order is
12effective. (1) In this chapter, "appropriate person" means:
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(a) With respect to an endorsement, the person specified by a security
14certificate or by an effective special endorsement to be entitled to the security;
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(b) With respect to an instruction, the registered owner of an uncertificated
16security;
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(c) With respect to an entitlement order, the entitlement holder;
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(d) If the person designated in par. (a), (b) or (c) is deceased, the designated
19person's successor taking under other law or the designated person's personal
20representative acting for the estate of the decedent; or
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(e) If the person designated in par. (a), (b) or (c) lacks capacity, the designated
22person's guardian, conservator or other similar representative who has power under
23other law to transfer the security or financial asset.
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24(2) An endorsement, instruction or entitlement order is effective if:
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(a) It is made by the appropriate person;
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1(b) It is made by a person who has power under the law of agency to transfer
2the security or financial asset on behalf of the appropriate person, including, in the
3case of an instruction or entitlement order, a person who has control under s. 408.106
4(3) (b) or (4) (b); or
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(c) The appropriate person has ratified it or is otherwise precluded from
6asserting its ineffectiveness.
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7(3) An endorsement, instruction or entitlement order made by a representative
8is effective even if:
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(a) The representative has failed to comply with a controlling instrument or
10with the law of the state having jurisdiction of the representative relationship,
11including any law requiring the representative to obtain court approval of the
12transaction; or
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(b) The representative's action in making the endorsement, instruction or
14entitlement order or using the proceeds of the transaction is otherwise a breach of
15duty.
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16(4) If a security is registered in the name of or specially endorsed to a person
17described as a representative, or if a securities account is maintained in the name
18of a person described as a representative, an endorsement, instruction or entitlement
19order made by the person is effective even though the person is no longer serving in
20the described capacity.
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21(5) Effectiveness of an endorsement, instruction or entitlement order is
22determined as of the date the endorsement, instruction or entitlement order is made,
23and an endorsement, instruction or entitlement order does not become ineffective by
24reason of any later change of circumstances.
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1408.108 Warranties in direct holding. (1) A person who transfers a
2certificated security to a purchaser for value warrants to the purchaser, and an
3endorser, if the transfer is by endorsement, warrants to any subsequent purchaser,
4that:
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(a) The certificate is genuine and has not been materially altered;
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(b) The transferor or endorser does not know of any fact that might impair the
7validity of the security;
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(c) There is no adverse claim to the security;
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(d) The transfer does not violate any restriction on transfer;
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(e) If the transfer is by endorsement, the endorsement is made by an
11appropriate person, or if the endorsement is by an agent, the agent has actual
12authority to act on behalf of the appropriate person; and
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(f) The transfer is otherwise effective and rightful.
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14(2) A person who originates an instruction for registration of transfer of an
15uncertificated security to a purchaser for value warrants to the purchaser that:
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(a) The instruction is made by an appropriate person, or if the instruction is by
17an agent, the agent has actual authority to act on behalf of the appropriate person;
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(b) The security is valid;
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(c) There is no adverse claim to the security; and
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(d) At the time the instruction is presented to the issuer:
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1. The purchaser will be entitled to the registration of transfer;
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2. The transfer will be registered by the issuer free from all liens, security
23interests, restrictions and claims other than those specified in the instruction;
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3. The transfer will not violate any restriction on transfer; and
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4. The requested transfer will otherwise be effective and rightful.
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1(3) A person who transfers an uncertificated security to a purchaser for value
2and does not originate an instruction in connection with the transfer warrants that:
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(a) The uncertificated security is valid;
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(b) There is no adverse claim to the security;
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(c) The transfer does not violate any restriction on transfer; and
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(d) The transfer is otherwise effective and rightful.
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7(4) A person who endorses a security certificate warrants to the issuer that:
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(a) There is no adverse claim to the security; and
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(b) The endorsement is effective.
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10(5) A person who originates an instruction for registration of transfer of an
11uncertificated security warrants to the issuer that:
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(a) The instruction is effective; and
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(b) At the time the instruction is presented to the issuer the purchaser will be
14entitled to the registration of transfer.
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15(6) A person who presents a certificated security for registration of transfer or
16for payment or exchange warrants to the issuer that the person is entitled to the
17registration, payment or exchange, but a purchaser for value and without notice of
18adverse claims to whom transfer is registered warrants only that the person has no
19knowledge of any unauthorized signature in a necessary endorsement.
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20(7) If a person acts as agent of another in delivering a certificated security to
21a purchaser, the identity of the principal was known to the person to whom the
22certificate was delivered, and the certificate delivered by the agent was received by
23the agent from the principal or received by the agent from another person at the
24direction of the principal, the person delivering the security certificate warrants only
1that the delivering person has authority to act for the principal and does not know
2of any adverse claim to the certificated security.
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3(8) A secured party who redelivers a security certificate received, or after
4payment and on order of the debtor delivers the security certificate to another
5person, makes only the warranties of an agent under sub. (7).
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6(9) Except as otherwise provided in sub. (7), a broker acting for a customer
7makes to the issuer and a purchaser the warranties provided in subs. (1) to (6). A
8broker that delivers a security certificate to its customer, or causes its customer to
9be registered as the owner of an uncertificated security, makes to the customer the
10warranties provided in sub. (1) or (2), and has the rights and privileges of a purchaser
11under this section. The warranties of and in favor of the broker acting as an agent
12are in addition to applicable warranties given by and in favor of the customer.
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13408.109 Warranties in indirect holding. (1) A person who originates an
14entitlement order to a securities intermediary warrants to the securities
15intermediary that:
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(a) The entitlement order is made by an appropriate person, or if the
17entitlement order is by an agent, the agent has actual authority to act on behalf of
18the appropriate person; and
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(b) There is no adverse claim to the security entitlement.
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20(2) A person who delivers a security certificate to a securities intermediary for
21credit to a securities account or originates an instruction with respect to an
22uncertificated security directing that the uncertificated security be credited to a
23securities account makes to the securities intermediary the warranties specified in
24s. 408.108 (1) or (2).
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1(3) If a securities intermediary delivers a security certificate to its entitlement
2holder or causes its entitlement holder to be registered as the owner of an
3uncertificated security, the securities intermediary makes to the entitlement holder
4the warranties specified in s. 408.108 (1) or (2).
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5408.110 Applicability; choice of law. (1) The local law of the issuer's
6jurisdiction, as specified in sub. (4), governs:
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(a) The validity of a security;
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(b) The rights and duties of the issuer with respect to registration of transfer;
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(c) The effectiveness of registration of transfer by the issuer;
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(d) Whether the issuer owes any duties to an adverse claimant to a security;
11and
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(e) Whether an adverse claim can be asserted against a person to whom
13transfer of a certificated or uncertificated security is registered or a person who
14obtains control of an uncertificated security.
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15(2) The local law of the securities intermediary's jurisdiction, as specified in
16sub. (5), governs:
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(a) Acquisition of a security entitlement from the securities intermediary;
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(b) The rights and duties of the securities intermediary and entitlement holder
19arising out of a security entitlement;
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(c) Whether the securities intermediary owes any duties to an adverse claimant
21to a security entitlement; and
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(d) Whether an adverse claim can be asserted against a person who acquires
23a security entitlement from the securities intermediary or a person who purchases
24a security entitlement or interest therein from an entitlement holder.
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1(3) The local law of the jurisdiction in which a security certificate is located at
2the time of delivery governs whether an adverse claim can be asserted against a
3person to whom the security certificate is delivered.
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4(4) In this section, "issuer's jurisdiction" means the jurisdiction under which
5the issuer of the security is organized or, if permitted by the law of that jurisdiction,
6the law of another jurisdiction specified by the issuer. An issuer organized under the
7law of this state may specify the law of another jurisdiction as the law governing the
8matters specified in sub. (1) (b) to (e).
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9(5) The following rules determine a "securities intermediary's jurisdiction" for
10purposes of this section:
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(a) If an agreement between the securities intermediary and its entitlement
12holder specifies that it is governed by the law of a particular jurisdiction, that
13jurisdiction is the securities intermediary's jurisdiction.
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(b) If an agreement between the securities intermediary and its entitlement
15holder does not specify the governing law as provided in par. (a), but expressly
16specifies that the securities account is maintained at an office in a particular
17jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
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(c) If an agreement between the securities intermediary and its entitlement
19holder does not specify a jurisdiction as provided in par. (a) or (b), the securities
20intermediary's jurisdiction is the jurisdiction in which is located the office identified
21in an account statement as the office serving the entitlement holder's account.
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(d) If an agreement between the securities intermediary and its entitlement
23holder does not specify a jurisdiction as provided in par. (a) or (b) and an account
24statement does not identify an office serving the entitlement holder's account as
1provided in par. (c), the securities intermediary's jurisdiction is the jurisdiction in
2which is located the chief executive office of the securities intermediary.