SB308,46,20
18(2) A securities intermediary is obligated to its entitlement holder for a
19payment or distribution made by the issuer of a financial asset if the payment or
20distribution is received by the securities intermediary.
SB308,46,24
21408.506 Duty of securities intermediary to exercise rights as directed
22by entitlement holder. A securities intermediary shall exercise rights with
23respect to a financial asset if directed to do so by an entitlement holder. A securities
24intermediary satisfies the duty if:
SB308,47,2
1(1) The securities intermediary acts with respect to the duty as agreed upon
2by the entitlement holder and the securities intermediary; or
SB308,47,6
3(2) In the absence of agreement, the securities intermediary either places the
4entitlement holder in a position to exercise the rights directly or exercises due care
5in accordance with reasonable commercial standards to follow the direction of the
6entitlement holder.
SB308,47,13
7408.507 Duty of securities intermediary to comply with entitlement
8order. (1) A securities intermediary shall comply with an entitlement order if the
9entitlement order is originated by the appropriate person, the securities
10intermediary has had reasonable opportunity to assure itself that the entitlement
11order is genuine and authorized, and the securities intermediary has had reasonable
12opportunity to comply with the entitlement order. A securities intermediary satisfies
13the duty if:
SB308,47,1514
(a) The securities intermediary acts with respect to the duty as agreed upon by
15the entitlement holder and the securities intermediary; or
SB308,47,1816
(b) In the absence of agreement, the securities intermediary exercises due care
17in accordance with reasonable commercial standards to comply with the entitlement
18order.
SB308,47,24
19(2) If a securities intermediary transfers a financial asset pursuant to an
20ineffective entitlement order, the securities intermediary shall reestablish a security
21entitlement in favor of the person entitled to it, and pay or credit any payments or
22distributions that the person did not receive as a result of the wrongful transfer. If
23the securities intermediary does not reestablish a security entitlement, the
24securities intermediary is liable to the entitlement holder for damages.
SB308,48,7
1408.508 Duty of securities intermediary to change entitlement
2holder's position to other form of security holding. A securities intermediary
3shall act at the direction of an entitlement holder to change a security entitlement
4into another available form of holding for which the entitlement holder is eligible,
5or to cause the financial asset to be transferred to a securities account of the
6entitlement holder with another securities intermediary. A securities intermediary
7satisfies the duty if:
SB308,48,9
8(1) The securities intermediary acts as agreed upon by the entitlement holder
9and the securities intermediary; or
SB308,48,12
10(2) In the absence of agreement, the securities intermediary exercises due care
11in accordance with reasonable commercial standards to follow the direction of the
12entitlement holder.
SB308,48,18
13408.509 Specification of duties of securities intermediary by other
14statute or regulation; manner of performance of duties of securities
15intermediary; and exercise of rights of entitlement holder. (1) If the
16substance of a duty imposed upon a securities intermediary by ss. 408.504 to 408.508
17is the subject of any other statute, regulation or rule, compliance with that statute,
18regulation or rule satisfies the duty.
SB308,48,24
19(2) To the extent that specific standards for the performance of the duties of a
20securities intermediary or the exercise of the rights of an entitlement holder are not
21specified by other statute, regulation or rule or by agreement between the securities
22intermediary and entitlement holder, the securities intermediary shall perform its
23duties and the entitlement holder shall exercise its rights in a commercially
24reasonable manner.
SB308,49,2
1(3) The obligation of a securities intermediary to perform the duties imposed
2by ss. 408.504 to 408.508 is subject to:
SB308,49,43
(a) Rights of the securities intermediary arising out of a security interest under
4a security agreement with the entitlement holder or otherwise; and
SB308,49,75
(b) Rights of the securities intermediary under any other law, regulation, rule
6or agreement to withhold performance of its duties as a result of unfulfilled
7obligations of the entitlement holder to the securities intermediary.
SB308,49,9
8(4) Sections 408.504 to 408.508 do not require a securities intermediary to take
9any action that is prohibited by any other statute, regulation or rule.
SB308,49,15
10408.510 Rights of purchaser of security entitlement from entitlement
11holder. (1) An action based on an adverse claim to a financial asset or security
12entitlement, whether framed in conversion, replevin, constructive trust, equitable
13lien or other theory, may not be asserted against a person who purchases a security
14entitlement, or an interest therein, from an entitlement holder if the purchaser gives
15value, does not have notice of the adverse claim and obtains control.
SB308,49,18
16(2) If an adverse claim could not have been asserted against an entitlement
17holder under s. 408.502, the adverse claim cannot be asserted against a person who
18purchases a security entitlement, or an interest therein, from the entitlement holder.
SB308,49,24
19(3) In a case not covered by the priority rules in ch. 409, a purchaser for value
20of a security entitlement, or an interest therein, who obtains control has priority over
21a purchaser of a security entitlement, or an interest therein, who does not obtain
22control. Purchasers who have control rank equally, except that a securities
23intermediary as purchaser has priority over a conflicting purchaser who has control
24unless otherwise agreed by the securities intermediary.
SB308,50,7
1408.511 Priority among security interests and entitlement holders. (1)
2Except as otherwise provided in subs. (2) and (3), if a securities intermediary does
3not have sufficient interests in a particular financial asset to satisfy both its
4obligations to entitlement holders who have security entitlements to that financial
5asset and its obligation to a creditor of the securities intermediary who has a security
6interest in that financial asset, the claims of entitlement holders, other than the
7creditor, have priority over the claim of the creditor.
SB308,50,11
8(2) A claim of a creditor of a securities intermediary who has a security interest
9in a financial asset held by a securities intermediary has priority over claims of the
10securities intermediary's entitlement holders who have security entitlements with
11respect to that financial asset if the creditor has control over the financial asset.
SB308,50,16
12(3) If a clearing corporation does not have sufficient financial assets to satisfy
13both its obligations to entitlement holders who have security entitlements with
14respect to a financial asset and its obligation to a creditor of the clearing corporation
15who has a security interest in that financial asset, the claim of the creditor has
16priority over the claims of entitlement holders.
SB308,50,1717
subchapter VI
SB308,50,1818
Transitional provisions
SB308,50,22
19408.603 Saving provision. (1) If a security interest in a security is perfected
20on or before the effective date of this subsection .... [revisor inserts date], and the
21action by which the security interest was perfected would suffice to perfect a security
22interest under this chapter, no further action is required to continue perfection.
SB308,51,8
23(2) If a security interest in a security is perfected on or before the effective date
24of this subsection .... [revisor inserts date], under ch. 408, 1995 stats., but the action
25by which the security interest was perfected would not suffice to perfect a security
1interest under this chapter, the security interest remains perfected for a period of 4
2months after the effective date of this subsection .... [revisor inserts date], and
3continues perfected thereafter if appropriate action to perfect under this chapter is
4taken within that period. If a security interest is perfected on or before the effective
5date of this subsection .... [revisor inserts date], and the security interest can be
6perfected by filing under this chapter, a financing statement signed by the secured
7party instead of the debtor may be filed within that period to continue perfection or
8thereafter to perfect.
SB308, s. 9
9Section
9. 409.103 (6) of the statutes is repealed and recreated to read:
SB308,51,1110
409.103
(6) Investment property. (a) This subsection applies to investment
11property.
SB308,51,15
12(b) Except as otherwise provided in par. (f), during the time that a security
13certificate is located in a jurisdiction, perfection of a security interest, the effect of
14perfection or nonperfection, and the priority of a security interest in the certificated
15security represented thereby are governed by the local law of that jurisdiction.
SB308,51,19
16(c) Except as otherwise provided in par. (f), perfection of a security interest, the
17effect of perfection or nonperfection, and the priority of a security interest in an
18uncertificated security are governed by the local law of the issuer's jurisdiction as
19specified in s. 408.110 (4).
SB308,51,23
20(d) Except as otherwise provided in par. (f), perfection of a security interest, the
21effect of perfection or nonperfection, and the priority of a security interest in a
22security entitlement or securities account are governed by the local law of the
23securities intermediary's jurisdiction as specified in s. 408.110 (5).
SB308,52,3
24(e) Except as otherwise provided in par. (f), perfection of a security interest, the
25effect of perfection or nonperfection, and the priority of a security interest in a
1commodity contract or commodity account are governed by the local law of the
2commodity intermediary's jurisdiction. The following rules determine a "commodity
3intermediary's jurisdiction" for purposes of this paragraph:
SB308,52,64
1. If an agreement between the commodity intermediary and commodity
5customer specifies that it is governed by the law of a particular jurisdiction, that
6jurisdiction is the commodity intermediary's jurisdiction.
SB308,52,107
2. If an agreement between the commodity intermediary and commodity
8customer does not specify the governing law as provided in subd. 1., but expressly
9specifies that the commodity account is maintained at an office in a particular
10jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
SB308,52,1411
3. If an agreement between the commodity intermediary and commodity
12customer does not specify a jurisdiction as provided in subd. 1. or 2., the commodity
13intermediary's jurisdiction is the jurisdiction in which is located the office identified
14in an account statement as the office serving the commodity customer's account.
SB308,52,1915
4. If an agreement between the commodity intermediary and commodity
16customer does not specify a jurisdiction as provided in subd. 1. or 2. and an account
17statement does not identify an office serving the commodity customer's account as
18provided in subd. 3., the commodity intermediary's jurisdiction is the jurisdiction in
19which is located the chief executive office of the commodity intermediary.
SB308,52,24
20(f) Perfection of a security interest by filing, automatic perfection of a security
21interest in investment property granted by a broker or securities intermediary, and
22automatic perfection of a security interest in a commodity contract or commodity
23account granted by a commodity intermediary are governed by the local law of the
24jurisdiction in which the debtor is located.
SB308, s. 10
25Section
10. 409.105 (1) (h) of the statutes is amended to read:
SB308,53,6
1409.105
(1) (h) "Goods" includes all things which are movable at the time the
2security interest attaches or which are fixtures (s. 409.313), but does not include
3money, documents, instruments,
investment property, accounts, chattel paper,
4general intangibles or minerals or the like (including oil and gas) before extraction.
5"Goods" also includes standing timber which is to be cut and removed under a
6conveyance or contract for sale, the unborn young of animals and growing crops.
SB308, s. 11
7Section
11. 409.105 (1) (i) of the statutes is amended to read:
SB308,53,128
409.105
(1) (i) "Instrument" means a negotiable instrument as defined in s.
9403.104
or a certificated security as defined in s. 408.102 or any other writing which
10evidences a right to the payment of money and is not itself a security agreement or
11lease and is of a type which is in ordinary course of business transferred by delivery
12with any necessary endorsement or assignment.
SB308, s. 12
13Section
12. 409.105 (2) (an) of the statutes is created to read:
SB308,53,1414
409.105
(2) (an) "Commodity contract" — s. 409.115 (1) (b).
SB308, s. 13
15Section
13. 409.105 (2) (ap) of the statutes is created to read:
SB308,53,1616
409.105
(2) (ap) "Commodity customer" — s. 409.115 (1) (c).
SB308, s. 14
17Section
14. 409.105 (2) (aq) of the statutes is created to read:
SB308,53,1818
409.105
(2) (aq) "Commodity intermediary" — s. 409.115 (1) (d).
SB308, s. 15
19Section
15. 409.105 (2) (cb) of the statutes is created to read:
SB308,53,2020
409.105
(2) (cb) "Control" — s. 409.115 (1) (e).
SB308, s. 16
21Section
16. 409.105 (2) (gm) of the statutes is created to read:
SB308,53,2222
409.105
(2) (gm) "Investment property" — s. 409.115 (1) (f).
SB308, s. 17
23Section
17. 409.105 (3) (a) of the statutes is renumbered 409.105 (3) (am).
SB308, s. 18
24Section
18. 409.105 (3) (ac) of the statutes is created to read:
SB308,53,2525
409.105
(3) (ac) "Broker" — s. 408.102 (1) (c).
SB308, s. 19
1Section
19. 409.105 (3) (ag) of the statutes is created to read:
SB308,54,22
409.105
(3) (ag) "Certificated security" — s. 408.102 (1) (d).
SB308, s. 20
3Section
20. 409.105 (3) (as) of the statutes is created to read:
SB308,54,44
409.105
(3) (as) "Clearing corporation" — s. 408.102 (1) (e).
SB308, s. 21
5Section
21. 409.105 (3) (bh) of the statutes is created to read:
SB308,54,66
409.105
(3) (bh) "Delivery" — s. 408.301.
SB308, s. 22
7Section
22. 409.105 (3) (bp) of the statutes is created to read:
SB308,54,88
409.105
(3) (bp) "Entitlement holder" — s. 408.102 (1) (g).
SB308, s. 23
9Section
23. 409.105 (3) (bt) of the statutes is created to read:
SB308,54,1010
409.105
(3) (bt) "Financial asset" — s. 408.102 (1) (i).
SB308, s. 24
11Section
24. 409.105 (3) (f) of the statutes is created to read:
SB308,54,1212
409.105
(3) (f) "Securities intermediary" — s. 408.102 (1) (n).
SB308, s. 25
13Section
25. 409.105 (3) (g) of the statutes is created to read:
SB308,54,1414
409.105
(3) (g) "Security" — s. 408.102 (1) (o).
SB308, s. 26
15Section
26. 409.105 (3) (h) of the statutes is created to read:
SB308,54,1616
409.105
(3) (h) "Security certificate" — s. 408.102 (1) (p).
SB308, s. 27
17Section
27. 409.105 (3) (i) of the statutes is created to read:
SB308,54,1818
409.105
(3) (i) "Security entitlement" — s. 408.102 (1) (q).
SB308, s. 28
19Section
28. 409.105 (3) (j) of the statutes is created to read:
SB308,54,2020
409.105
(3) (j) "Uncertificated security" — s. 408.102 (1) (r).
SB308, s. 29
21Section
29. 409.106 of the statutes is amended to read:
SB308,55,4
22409.106 Definitions: "account"; "general intangibles". "Account" means
23any right to payment for goods sold or leased or for services rendered which is not
24evidenced by an instrument or chattel paper, whether or not it has been earned by
25performance. "General intangibles" means any personal property (including things
1in action) other than goods, accounts, chattel paper, documents, instruments
,
2investment property and money. All rights to payment earned or unearned under
3a charter or other contract involving the use or hire of a vessel and all rights incident
4to the charter or contract are accounts.
SB308, s. 30
5Section
30. 409.115 of the statutes is created to read:
SB308,55,6
6409.115 Investment property. (1) In this chapter:
SB308,55,8
7(a) "Commodity account" means an account maintained by a commodity
8intermediary in which a commodity contract is carried for a commodity customer.
SB308,55,119
(b) "Commodity contract" means a commodity futures contract, an option on a
10commodity futures contract, a commodity option or other contract that, in each case,
11is:
SB308,55,1412
1. Traded on or subject to the rules of a board of trade that has been designated
13as a contract market for such a contract pursuant to the federal commodities laws;
14or
SB308,55,1615
2. Traded on a foreign commodity board of trade, exchange or market, and is
16carried on the books of a commodity intermediary for a commodity customer.
SB308,55,1817
(c) "Commodity customer" means a person for whom a commodity intermediary
18carries a commodity contract on its books.
SB308,55,1919
(d) "Commodity intermediary" means:
SB308,55,2120
1. A person who is registered as a futures commission merchant under the
21federal commodities laws; or
SB308,55,2422
2. A person who in the ordinary course of its business provides clearance or
23settlement services for a board of trade that has been designated as a contract
24market pursuant to the federal commodities laws.
SB308,56,11
1(e) "Control" with respect to a certificated security, uncertificated security, or
2security entitlement has the meaning specified in s. 408.106. A secured party has
3control over a commodity contract if, by agreement among the commodity customer,
4the commodity intermediary, and the secured party, the commodity intermediary has
5agreed that it will apply any value distributed on account of the commodity contract
6as directed by the secured party without further consent by the commodity customer.
7If a commodity customer grants a security interest in a commodity contract to its own
8commodity intermediary, the commodity intermediary as secured party has control.
9A secured party has control over a securities account or commodity account if the
10secured party has control over all security entitlements or commodity contracts
11carried in the securities account or commodity account.
SB308,56,1212
(f) "Investment property" means: