SB308: Bill Text

SB308,51,23 (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).

SB308,52,3 (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:

SB308,52,6 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.

SB308,52,10 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.

SB308,52,14 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.

SB308,52,19 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.

SB308,52,24 (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.

SB308, s. 10 Section 10. 409.105 (1) (h) of the statutes is amended to read:

SB308,53,6 409.105 (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.

SB308, s. 11 Section 11. 409.105 (1) (i) of the statutes is amended to read:

SB308,53,12 409.105 (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.

SB308, s. 12 Section 12. 409.105 (2) (an) of the statutes is created to read:

SB308,53,14 409.105 (2) (an) "Commodity contract" — s. 409.115 (1) (b).

SB308, s. 13 Section 13. 409.105 (2) (ap) of the statutes is created to read:

SB308,53,16 409.105 (2) (ap) "Commodity customer" — s. 409.115 (1) (c).

SB308, s. 14 Section 14. 409.105 (2) (aq) of the statutes is created to read:

SB308,53,18 409.105 (2) (aq) "Commodity intermediary" — s. 409.115 (1) (d).

SB308, s. 15 Section 15. 409.105 (2) (cb) of the statutes is created to read:

SB308,53,20 409.105 (2) (cb) "Control" — s. 409.115 (1) (e).

SB308, s. 16 Section 16. 409.105 (2) (gm) of the statutes is created to read:

SB308,53,22 409.105 (2) (gm) "Investment property" — s. 409.115 (1) (f).

SB308, s. 17 Section 17. 409.105 (3) (a) of the statutes is renumbered 409.105 (3) (am).

SB308, s. 18 Section 18. 409.105 (3) (ac) of the statutes is created to read:

SB308,53,25 409.105 (3) (ac) "Broker" — s. 408.102 (1) (c).

SB308, s. 19 Section 19. 409.105 (3) (ag) of the statutes is created to read:

SB308,54,2 409.105 (3) (ag) "Certificated security" — s. 408.102 (1) (d).

SB308, s. 20 Section 20. 409.105 (3) (as) of the statutes is created to read:

SB308,54,4 409.105 (3) (as) "Clearing corporation" — s. 408.102 (1) (e).

SB308, s. 21 Section 21. 409.105 (3) (bh) of the statutes is created to read:

SB308,54,6 409.105 (3) (bh) "Delivery" — s. 408.301.

SB308, s. 22 Section 22. 409.105 (3) (bp) of the statutes is created to read:

SB308,54,8 409.105 (3) (bp) "Entitlement holder" — s. 408.102 (1) (g).

SB308, s. 23 Section 23. 409.105 (3) (bt) of the statutes is created to read:

SB308,54,10 409.105 (3) (bt) "Financial asset" — s. 408.102 (1) (i).

SB308, s. 24 Section 24. 409.105 (3) (f) of the statutes is created to read:

SB308,54,12 409.105 (3) (f) "Securities intermediary" — s. 408.102 (1) (n).

SB308, s. 25 Section 25. 409.105 (3) (g) of the statutes is created to read:

SB308,54,14 409.105 (3) (g) "Security" — s. 408.102 (1) (o).

SB308, s. 26 Section 26. 409.105 (3) (h) of the statutes is created to read:

SB308,54,16 409.105 (3) (h) "Security certificate" — s. 408.102 (1) (p).

SB308, s. 27 Section 27. 409.105 (3) (i) of the statutes is created to read:

SB308,54,18 409.105 (3) (i) "Security entitlement" — s. 408.102 (1) (q).

SB308, s. 28 Section 28. 409.105 (3) (j) of the statutes is created to read:

SB308,54,20 409.105 (3) (j) "Uncertificated security" — s. 408.102 (1) (r).

SB308, s. 29 Section 29. 409.106 of the statutes is amended to read:

SB308,55,4 409.106 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.

SB308, s. 30 Section 30. 409.115 of the statutes is created to read:

SB308,55,6 409.115 Investment property. (1) In this chapter:

SB308,55,8 (a) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

SB308,55,11 (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:

SB308,55,14 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

SB308,55,16 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.

SB308,55,18 (c) "Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books.

SB308,55,19 (d) "Commodity intermediary" means:

SB308,55,21 1. A person who is registered as a futures commission merchant under the federal commodities laws; or

SB308,55,24 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.

SB308,56,11 (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.

SB308,56,12 (f) "Investment property" means:

SB308,56,13 1. A security, whether certificated or uncertificated;

SB308,56,14 2. A security entitlement;

SB308,56,15 3. A securities account;

SB308,56,16 4. A commodity contract; or

SB308,56,17 5. A commodity account.

SB308,56,22 (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.

SB308,57,7 (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.

SB308,57,9 (4) Perfection of a security interest in investment property is governed by the following rules:

SB308,57,10 (a) A security interest in investment property may be perfected by control.

SB308,57,12 (b) Except as otherwise provided in pars. (c) and (d), a security interest in investment property may be perfected by filing.

SB308,57,17 (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.

SB308,57,22 (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.

SB308,57,24 (5) Priority between conflicting security interests in the same investment property is governed by the following rules:

SB308,58,3 (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.

SB308,58,5 (b) Except as otherwise provided in pars. (c) and (d), conflicting security interests of secured parties each of whom has control rank equally.

SB308,58,9 (c) Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party.

SB308,58,13 (d) Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party.

SB308,58,15 (e) Conflicting security interests granted by a broker, a securities intermediary or a commodity intermediary which are perfected without control rank equally.

SB308,58,18 (f) In all other cases, priority between conflicting security interests in investment property is governed by s. 409.312 (5), (6) and (7). Section 409.312 (4) does not apply to investment property.

SB308,58,24 (6) If a security certificate in registered form is delivered to a secured party pursuant to agreement, a written security agreement is not required for attachment or enforceability of the security interest, delivery suffices for perfection of the security interest, and the security interest has priority over a conflicting security interest perfected by means other than control, even if a necessary endorsement is lacking.

SB308, s. 31 Section 31. 409.116 of the statutes is created to read:

SB308,59,9 409.116 Security interest arising in purchase or delivery of financial asset. (1) If a person buys a financial asset through a securities intermediary in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase, and the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary, the securities intermediary has a security interest in the buyer's security entitlement securing the buyer's obligation to pay. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

SB308,59,18 (2) If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery rather than payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

SB308, s. 32 Section 32. 409.203 (1) (intro.) of the statutes is amended to read:

SB308,59,24 409.203 (1) (intro.) Subject to s. 404.210 on the security interest of a collecting bank, s. 408.321 on security interests in securities ss. 409.115 and 409.116 on security interests in investment property, and s. 409.113 on a security interest arising under ch. 402 or 411, a security interest is not enforceable against the debtor or 3rd parties with respect to the collateral and does not attach unless:

SB308, s. 33 Section 33. 409.203 (1) (a) of the statutes is amended to read:

SB308,60,6 409.203 (1) (a) The collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops growing or to be grown or timber to be cut, a description of the land concerned;

SB308, s. 34 Section 34. 409.301 (1) (d) of the statutes is amended to read:

SB308,60,11 409.301 (1) (d) In the case of accounts and , general intangibles, and investment property, a person who is not a secured party and who is a transferee to the extent that that person gives value without knowledge of the security interest and before it is perfected.

SB308, s. 35 Section 35. 409.302 (1) (b) of the statutes is amended to read:

SB308,60,15 409.302 (1) (b) A security interest temporarily perfected in instruments, certificated securities, or documents without delivery under s. 409.304 or in proceeds for a 10-day period under s. 409.306;