§ 4-8-511 — Priority among security interests and entitlement holders

(a)
Except as otherwise provided in subsections (b) and (c) of this section, if a securities
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 intermediary
who has a security interest in that financial asset, the claims of entitlement holders,
other than the creditor, have priority over the claim of the creditor.

(b) A claim of a creditor of a securities intermediary who has a security
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 financial
asset.

(c) If 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, the claim of the
creditor has priority over the claims of entitlement holders.

Legislative History

Source: L. 96: Entire article R&RE, p. 232, � 2, effective July 1.