(a) Except as otherwise provided in Section 8.406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered:
- (1) pursuant to an ineffective indorsement or instruction;
- (2) after a demand that the issuer not register transfer became effective under Section 8.403(a) and the issuer did not comply with Section 8.403(b);
- (3) after the issuer had been served with an appropriate injunction, restraining order, or other process from a court of competent jurisdiction enjoining it from registering the transfer, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
- (4) by an issuer acting in collusion with the wrongdoer.
- (b) An issuer that is liable for wrongful registration of transfer under Subsection (a) on demand shall provide the person entitled to the security with a like certificated or uncertificated security and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer's liability to provide the person with a like security is governed by Section 8.210.
- (c) Except as otherwise provided in Subsection (a) or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective indorsement or instruction.
Amended by Acts 1995, 74th Leg., ch. 962, Sec. 1, eff. Sept. 1, 1995.