HB 443

INVESTMENT SECURITIES UNDER THE UNIFORM COMMERCIAL CODE Choice of Law Under present law, the local law of the securities intermediary's jurisdiction governs (i) the validity of a security, (ii) the rights and duties of the issuer wit h respect to registration of transfer, (iii) the effectiveness of registration of transfer by the issuer, (iv) whether the issuer owes any duties to an adverse claimant to a security, and (v) whether an adverse claim can be asserted against a person to wh o m transfer of a certified or uncertified security is registered or a person who obtains control of an uncertified security. This bill, instead, requires these items to be governed by the law of this state. Priority Present law provides that if a secu rities 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 interme d iary who has a security interest in that financial asset, then the claims of entitlement holders, other than the creditor, generally have priority over the claim of the creditor. However, a claim of a creditor of a securities intermediary who has a sec urity 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 fi n ancial asset. Additionally, i f 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, then the claim of the creditor has priority over the claims of entitlement holders. This bill removes these exception provisions. SECURED TRANSACTIONS UNDER THE UNIFORM COMMERCIAL CODE Governing Law Under present law, local law of the securities intermediary's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account. This bill removes this provision.