§ 8-501. Securities account; acquisition of security entitlement from securities intermediary.
(a) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement
under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled
to exercise the rights that comprise the financial asset.
(b) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary:
(1) indicates by book entry that a financial asset has been credited to the person's securities account;
(2) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it
for credit to the person's securities account; or
(3) becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account.
(c) If a condition of subsection (b) has been met, a person has a security entitlement even though the securities intermediary
does not itself hold the financial asset.
(d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the
name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary
or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement
with respect to the financial asset.
(e) Issuance of a security is not establishment of a security entitlement.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 30, § 1.;
§ 8-502. Assertion of adverse claim against entitlement holder.
An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable
lien, or other theory, may not be asserted against a person who acquires a security entitlement under Section 8-501 for value
and without notice of the adverse claim.
71 Del. Laws, c. 75, § 1.;
§ 8-503. Property interest of entitlement holder in financial asset held by securities intermediary.
(a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular
financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary
for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of
the securities intermediary, except as otherwise provided in Section 8-511.
(b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) is a pro rata
property interest in all interests in that financial asset held by the securities intermediary, without regard to the time
the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in
that financial asset.
(c) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against the securities intermediary only by exercise of the entitlement holder's rights under Sections 8-505 through 8-508.
(d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against a purchaser of the financial asset or interest therein only if:
(1) insolvency proceedings have been initiated by or against the securities intermediary;
(2) the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements
of all of its entitlement holders to that financial asset;
(3) the securities intermediary violated its obligations under Section 8-504 by transferring the financial asset or interest
therein to the purchaser; and
(4) the purchaser is not protected under subsection (e).
The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to
a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or
other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has
the right to recover its interest in the financial asset from the purchaser.
(e) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection
(a), whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against
any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with
the securities intermediary in violating the securities intermediary's obligations under Section 8-504.
71 Del. Laws, c. 75, § 1.;
§ 8-504. Duty of securities intermediary to maintain financial asset.
(a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding
to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that
financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities
intermediaries.
(b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security
interests in a financial asset it is obligated to maintain pursuant to subsection (a).
(c) A securities intermediary satisfies the duty in subsection (a) 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 obtain and maintain the financial asset.
(d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to
which its entitlement holders have security entitlements.
71 Del. Laws, c. 75, § 1.;
§ 8-505. Duty of securities intermediary with respect to payments and distributions.
(a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset.
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 attempt to obtain the payment or distribution.
(b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a
financial asset if the payment or distribution is received by the securities intermediary.
71 Del. Laws, c. 75, § 1.;
§ 8-506. Duty of securities intermediary to exercise rights as directed by entitlement holder.
A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder.
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 either places the entitlement holder in a position to exercise
the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the
entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-507. Duty of securities intermediary to comply with entitlement order.
(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 pursuant to 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.
71 Del. Laws, c. 75, § 1.;
§ 8-508. Duty of securities intermediary to change entitlement holder's position to other form of security holding.
A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another
available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred
to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies
the duty if:
(1) the securities intermediary acts 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 follow the direction of the entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-509. Specification of duties of securities intermediary by other statute or regulation; manner of performance of duties
of securities intermediary and exercise of rights of entitlement holder.
(a) If the substance of a duty imposed upon a securities intermediary by Sections 8-504 through 8-508 is the subject of other
statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty.
(b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of
the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities
intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall
exercise its rights in a commercially reasonable manner.
(c) The obligation of a securities intermediary to perform the duties imposed by Sections 8-504 through 8-508 is subject to:
(1) rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement
holder or otherwise; and
(2) rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties
as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
(d) Sections 8-504 through 8-508 do not require a securities intermediary to take any action that is prohibited by other statute,
regulation, or rule.
71 Del. Laws, c. 75, § 1.;
§ 8-510. Rights of purchaser of security entitlement from entitlement holder.
(a) In a case not covered by the priority rules in Article 9 or the rules stated in subsection (c), 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.
(b) If an adverse claim could not have been asserted against an entitlement holder under Section 8-502, the adverse claim
cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.
(c) In a case not covered by the priority rules in Article 9, 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 (d), purchasers who have control rank according to priority in
time of:
(1) 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 Section 8-106(d)(1);
(2) 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 Section 8-106(d)(2); or
(3) if the purchaser obtained control through another person under Section 8-106(d)(3), the time on which priority would be
based under this subsection if the other person were the secured party.
(d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed
by the securities intermediary.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 401, § 24.;
§ 8-511. Priority among security interests and entitlement holders.
(a) Except as otherwise provided in subsections (b) and (c), 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.
§ 8-501. Securities account; acquisition of security entitlement from securities intermediary.
(a) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement
under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled
to exercise the rights that comprise the financial asset.
(b) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary:
(1) indicates by book entry that a financial asset has been credited to the person's securities account;
(2) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it
for credit to the person's securities account; or
(3) becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account.
(c) If a condition of subsection (b) has been met, a person has a security entitlement even though the securities intermediary
does not itself hold the financial asset.
(d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the
name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary
or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement
with respect to the financial asset.
(e) Issuance of a security is not establishment of a security entitlement.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 30, § 1.;
§ 8-502. Assertion of adverse claim against entitlement holder.
An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable
lien, or other theory, may not be asserted against a person who acquires a security entitlement under Section 8-501 for value
and without notice of the adverse claim.
71 Del. Laws, c. 75, § 1.;
§ 8-503. Property interest of entitlement holder in financial asset held by securities intermediary.
(a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular
financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary
for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of
the securities intermediary, except as otherwise provided in Section 8-511.
(b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) is a pro rata
property interest in all interests in that financial asset held by the securities intermediary, without regard to the time
the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in
that financial asset.
(c) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against the securities intermediary only by exercise of the entitlement holder's rights under Sections 8-505 through 8-508.
(d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against a purchaser of the financial asset or interest therein only if:
(1) insolvency proceedings have been initiated by or against the securities intermediary;
(2) the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements
of all of its entitlement holders to that financial asset;
(3) the securities intermediary violated its obligations under Section 8-504 by transferring the financial asset or interest
therein to the purchaser; and
(4) the purchaser is not protected under subsection (e).
The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to
a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or
other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has
the right to recover its interest in the financial asset from the purchaser.
(e) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection
(a), whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against
any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with
the securities intermediary in violating the securities intermediary's obligations under Section 8-504.
71 Del. Laws, c. 75, § 1.;
§ 8-504. Duty of securities intermediary to maintain financial asset.
(a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding
to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that
financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities
intermediaries.
(b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security
interests in a financial asset it is obligated to maintain pursuant to subsection (a).
(c) A securities intermediary satisfies the duty in subsection (a) 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 obtain and maintain the financial asset.
(d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to
which its entitlement holders have security entitlements.
71 Del. Laws, c. 75, § 1.;
§ 8-505. Duty of securities intermediary with respect to payments and distributions.
(a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset.
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 attempt to obtain the payment or distribution.
(b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a
financial asset if the payment or distribution is received by the securities intermediary.
71 Del. Laws, c. 75, § 1.;
§ 8-506. Duty of securities intermediary to exercise rights as directed by entitlement holder.
A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder.
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 either places the entitlement holder in a position to exercise
the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the
entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-507. Duty of securities intermediary to comply with entitlement order.
(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 pursuant to 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.
71 Del. Laws, c. 75, § 1.;
§ 8-508. Duty of securities intermediary to change entitlement holder's position to other form of security holding.
A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another
available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred
to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies
the duty if:
(1) the securities intermediary acts 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 follow the direction of the entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-509. Specification of duties of securities intermediary by other statute or regulation; manner of performance of duties
of securities intermediary and exercise of rights of entitlement holder.
(a) If the substance of a duty imposed upon a securities intermediary by Sections 8-504 through 8-508 is the subject of other
statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty.
(b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of
the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities
intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall
exercise its rights in a commercially reasonable manner.
(c) The obligation of a securities intermediary to perform the duties imposed by Sections 8-504 through 8-508 is subject to:
(1) rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement
holder or otherwise; and
(2) rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties
as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
(d) Sections 8-504 through 8-508 do not require a securities intermediary to take any action that is prohibited by other statute,
regulation, or rule.
71 Del. Laws, c. 75, § 1.;
§ 8-510. Rights of purchaser of security entitlement from entitlement holder.
(a) In a case not covered by the priority rules in Article 9 or the rules stated in subsection (c), 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.
(b) If an adverse claim could not have been asserted against an entitlement holder under Section 8-502, the adverse claim
cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.
(c) In a case not covered by the priority rules in Article 9, 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 (d), purchasers who have control rank according to priority in
time of:
(1) 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 Section 8-106(d)(1);
(2) 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 Section 8-106(d)(2); or
(3) if the purchaser obtained control through another person under Section 8-106(d)(3), the time on which priority would be
based under this subsection if the other person were the secured party.
(d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed
by the securities intermediary.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 401, § 24.;
§ 8-511. Priority among security interests and entitlement holders.
(a) Except as otherwise provided in subsections (b) and (c), 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.
§ 8-501. Securities account; acquisition of security entitlement from securities intermediary.
(a) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement
under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled
to exercise the rights that comprise the financial asset.
(b) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary:
(1) indicates by book entry that a financial asset has been credited to the person's securities account;
(2) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it
for credit to the person's securities account; or
(3) becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account.
(c) If a condition of subsection (b) has been met, a person has a security entitlement even though the securities intermediary
does not itself hold the financial asset.
(d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the
name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary
or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement
with respect to the financial asset.
(e) Issuance of a security is not establishment of a security entitlement.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 30, § 1.;
§ 8-502. Assertion of adverse claim against entitlement holder.
An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable
lien, or other theory, may not be asserted against a person who acquires a security entitlement under Section 8-501 for value
and without notice of the adverse claim.
71 Del. Laws, c. 75, § 1.;
§ 8-503. Property interest of entitlement holder in financial asset held by securities intermediary.
(a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular
financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary
for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of
the securities intermediary, except as otherwise provided in Section 8-511.
(b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) is a pro rata
property interest in all interests in that financial asset held by the securities intermediary, without regard to the time
the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in
that financial asset.
(c) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against the securities intermediary only by exercise of the entitlement holder's rights under Sections 8-505 through 8-508.
(d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced
against a purchaser of the financial asset or interest therein only if:
(1) insolvency proceedings have been initiated by or against the securities intermediary;
(2) the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements
of all of its entitlement holders to that financial asset;
(3) the securities intermediary violated its obligations under Section 8-504 by transferring the financial asset or interest
therein to the purchaser; and
(4) the purchaser is not protected under subsection (e).
The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to
a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or
other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has
the right to recover its interest in the financial asset from the purchaser.
(e) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection
(a), whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against
any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with
the securities intermediary in violating the securities intermediary's obligations under Section 8-504.
71 Del. Laws, c. 75, § 1.;
§ 8-504. Duty of securities intermediary to maintain financial asset.
(a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding
to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that
financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities
intermediaries.
(b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security
interests in a financial asset it is obligated to maintain pursuant to subsection (a).
(c) A securities intermediary satisfies the duty in subsection (a) 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 obtain and maintain the financial asset.
(d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to
which its entitlement holders have security entitlements.
71 Del. Laws, c. 75, § 1.;
§ 8-505. Duty of securities intermediary with respect to payments and distributions.
(a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset.
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 attempt to obtain the payment or distribution.
(b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a
financial asset if the payment or distribution is received by the securities intermediary.
71 Del. Laws, c. 75, § 1.;
§ 8-506. Duty of securities intermediary to exercise rights as directed by entitlement holder.
A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder.
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 either places the entitlement holder in a position to exercise
the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the
entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-507. Duty of securities intermediary to comply with entitlement order.
(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 pursuant to 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.
71 Del. Laws, c. 75, § 1.;
§ 8-508. Duty of securities intermediary to change entitlement holder's position to other form of security holding.
A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another
available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred
to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies
the duty if:
(1) the securities intermediary acts 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 follow the direction of the entitlement holder.
71 Del. Laws, c. 75, § 1.;
§ 8-509. Specification of duties of securities intermediary by other statute or regulation; manner of performance of duties
of securities intermediary and exercise of rights of entitlement holder.
(a) If the substance of a duty imposed upon a securities intermediary by Sections 8-504 through 8-508 is the subject of other
statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty.
(b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of
the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities
intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall
exercise its rights in a commercially reasonable manner.
(c) The obligation of a securities intermediary to perform the duties imposed by Sections 8-504 through 8-508 is subject to:
(1) rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement
holder or otherwise; and
(2) rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties
as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
(d) Sections 8-504 through 8-508 do not require a securities intermediary to take any action that is prohibited by other statute,
regulation, or rule.
71 Del. Laws, c. 75, § 1.;
§ 8-510. Rights of purchaser of security entitlement from entitlement holder.
(a) In a case not covered by the priority rules in Article 9 or the rules stated in subsection (c), 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.
(b) If an adverse claim could not have been asserted against an entitlement holder under Section 8-502, the adverse claim
cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.
(c) In a case not covered by the priority rules in Article 9, 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 (d), purchasers who have control rank according to priority in
time of:
(1) 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 Section 8-106(d)(1);
(2) 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 Section 8-106(d)(2); or
(3) if the purchaser obtained control through another person under Section 8-106(d)(3), the time on which priority would be
based under this subsection if the other person were the secured party.
(d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed
by the securities intermediary.
71 Del. Laws, c. 75, § 1; 72 Del. Laws, c. 401, § 24.;
§ 8-511. Priority among security interests and entitlement holders.
(a) Except as otherwise provided in subsections (b) and (c), 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.