§ 41-08-50 — (8-510) Rights of purchaser of security entitlement from entitlement holder

1. In a case not covered by the priority rules in chapter 41-09 or the rules stated in
subsection 3, an action based on an adverse claim to a financial asset or security

entitlement, whether framed in conversion, replevin, constructive trust, equitable lien,
or other theory, may not be asserted against a person who purchases a security
entitlement, or an interest therein, from an entitlement holder if the purchaser gives
value, does not have notice of the adverse claim, and obtains control.
2. If an adverse claim could not have been asserted against an entitlement holder under
section 41-08-42, the adverse claim cannot be asserted against a person who
purchases a security entitlement, or an interest therein, from the entitlement holder.
3. In a case not covered by the priority rules in chapter 41-09, a purchaser for value of a
security entitlement, or an interest therein, who obtains control has priority over a
purchaser of a security entitlement, or an interest therein, who does not obtain control.
Except as otherwise provided in subsection 4, purchasers who have control rank
according to priority in time of:
a. The purchaser's becoming the person for whom the securities account, in which
the security entitlement is carried, is maintained, if the purchaser obtained control
under subdivision a of subsection 4 of section 41-08-06;
b. The securities intermediary's agreement to comply with the purchaser's
entitlement orders with respect to security entitlements carried or to be carried in
the securities account in which the security entitlement is carried, if the purchaser
obtained control under subdivision b of subsection 4 of section 41-08-06; or
c. If the purchaser obtained control through another person under subdivision c of
subsection 4 of section 41-08-06, the time on which priority would be based
under this subsection if the other person were the secured party.
4. A securities intermediary as purchaser has priority over a conflicting purchaser who
has control unless otherwise agreed by the securities intermediary.
41-08-51. (8-511) Priority among security interests and entitlement holders.
1. Except as otherwise provided in subsections 2 and 3, 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.
2. 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.
3. 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.