§ 4-8-404 — Wrongful registration

(a) Except as otherwise provided in section
4-8-406, 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 4-8-403 (a) and the issuer did not comply with section 4-8-403 (b);

(3) After the issuer had been served with an injunction, restraining order, or
other legal process enjoining it from registering the transfer, issued by a court of
competent jurisdiction, 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) of this section 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 4-8-210.

(c) Except as otherwise provided in subsection (a) of this section 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.

Legislative History

Source: L. 96: Entire article R&RE, p. 226, � 2, effective July 1.