§ 516 — Adverse claims

(a) General rule.--Notice to a credit union or Federal credit union of an adverse claim against shares standing in the name of any member shall not be effectual to cause the credit union or Federal credit union to recognize such adverse claim, unless the adverse claimant shall procure either an attachment or proper restraining order against the credit union or Federal credit union from a court of competent jurisdiction in a cause of action therein instituted by him, wherein the member or his legal representative is made a party in the manner provided by law, or unless he shall execute to the credit union or Federal credit union in form, and with sureties acceptable to it, a bond indemnifying the credit union or Federal credit union from any liability, loss, damages, costs and expenses arising from the recognition of such adverse claim.

(b) Exception.--This section shall not apply in any instance where the person in whose name the shares are held is a trustee for such adverse claimant, and the facts constituting such relationship, as well as the facts showing reasonable cause of belief on the part of the claimant that such trustee is about to misappropriate the shares, are made to appear by verified statement of such claimant.