§ 41-08-37 — (8-404) Wrongful registration

1. Except as otherwise provided in section 41-08-39, 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:
a. Pursuant to an ineffective endorsement or instruction;
b. After a demand that the issuer not register transfer became effective under
subsection 1 of section 41-08-36 and the issuer did not comply with subsection 2
of section 41-08-36;
c. 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
d. By an issuer acting in collusion with the wrongdoer.
2. An issuer that is liable for wrongful registration of transfer under subsection 1 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
41-08-26.
3. Except as otherwise provided in subsection 1 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 endorsement or instruction.