1. (a) A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that:

   1. (1) The entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
   2. (2) There is no adverse claim to the security entitlement.
2. (b) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in § 28:8-108(a) or (b).
3. (c) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in § 28:8-108(a) or (b).

Uniform Commercial Code Comment

“Uncertificated security”. Section 8-102(a)(18).

“Security certificate”. Section 8-102(a)(16).

“Securities intermediary”. Section 8-102(a)(14).

“Securities account”. Section 8-501.

“Person”. Section 1-201(30).

“Instruction”. Section 8-102(a)(12).

“Entitlement order”. Section 8-102(a)(8).

“Entitlement holder”. Section 8-102(a)(7).

“Appropriate person”. Section 8-107.

Definitional Cross References “Adverse claim”. Section 8-102(a)(1).

3. As with the Section 8-108 warranties, the warranties specified in this section may be modified by agreement under Section 1-102(3).

2. Subsection (c) states the warranties that a securities intermediary gives when a customer who has been holding securities in an account with the securities intermediary requests that certificates be delivered or that uncertificated securities be registered in the customer’s name. The warranties are the same as those that brokers make with respect to securities that the brokers sell to or buy on behalf of the customers. See Section 8-108(i).

1. Subsection (a) provides that a person who originates an entitlement order warrants to the securities intermediary that the order is authorized, and warrants the absence of adverse claims. Subsection (b) specifies the warranties that are given when a person who holds securities directly has the holding converted into indirect form. A person who delivers a certificate to a securities intermediary or originates an instruction for an uncertificated security gives to the securities intermediary the transfer warranties under Section 8-108. If the securities intermediary in turn delivers the certificate to a higher level securities intermediary, it gives the same warranties.

History

Apr. 9, 1997, D.C. Law 11-240, § 2, 44 DCR 1087

Prior Codifications

1981 Ed., § 28:8-109.