§ 26-1-8.1-507 — Duty of securities intermediary to comply with entitlement order; liability for wrongful transfer

Indiana § 26-1-8.1-507

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 8.1: Investment Securities

Text

(a) A securities intermediary shall comply
with an entitlement order if the entitlement order is originated by the
appropriate person, the securities intermediary has had reasonable
opportunity to assure itself that the entitlement order is genuine and
authorized, and the securities intermediary has had reasonable
opportunity to comply with the entitlement order. A securities
intermediary satisfies the duty if:
(1) the securities intermediary acts with respect to the duty as
agreed upon by the entitlement holder and the securities
intermediary; or
(2) in the absence of agreement, the securities intermediary
exercises due care in accordance with reasonable commercial
standards to comply with the entitlement order.
(b) If a securities intermediary transfers a financial asset under an
ineffective entitlement order, the securities intermediary shall
reestablish a security entitlement in favor of the person entitled to it,
and pay or credit any payments or distributions that the person did not
receive as a result of the wrongful transfer. If the securities
intermediary does not reestablish a security entitlement, the securities
intermediary is liable to the entitlement holder for damages.

Legislative History

As added by P.L.247-1995, SEC.10.