Section 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 of this title.(b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) of this section 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) of this section may be enforced against the securities intermediary only by exercise of the entitlement holder's rights under Sections 8-505 through 8-508 of this title.(d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) of this section 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 of this title by transferring the financial asset or interest therein to the purchaser; and(4) the purchaser is not protected under subsection (e) of this section. 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) of this section, 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 of this title.Okla. Stat. tit. 12A, § 8-503
Added by Laws 1995, SB 522, c. 242, § 43, eff. 2/1/1996.Oklahoma Code Comment
To the extent necessary to satisfy customer claims, securities held by a broker for its customers are not property of the broker subject to the claims of its creditors, except with respect to creditors to whom the securities have been pledged as collateral as provided in Section 8-511 . This Section does not necessarily determine how property held by an insolvent broker will be distributed. That question will be determined by the federal Bankruptcy Code and Securities Investor Protection Act, or other insolvency law in cases not governed by those statutes.
Although customer securities are not to this extent property of the broker, this does not mean the customer generally can assert claims against third parties to whom the broker may have transferred the securities. It is a fundamental principle of Part 5 that it is the responsibility of the securities intermediary to ensure the entitlement holder receives the economic and corporate rights comprising the security, and the entitlement holder can generally look only to the securities intermediary to discharge that responsibility.
Therefore, the entitlement holder can assert claims against third-party transferees only when: (1) the securities intermediary is the subject of insolvency proceedings; (2) the intermediary is unable to perform its obligations to the holder; (3) the transfer was a violation of the intermediary's duties under Section 8-504 to maintain financial assets sufficient to satisfy the rights of its entitlement holders; and (4) the transferee has not given value, obtained control, or acted in collusion with the intermediary in violating its Section 8-504 duties.
Prior Statutory Provisions:
Cf. pre-revision UCC § 8-313(2).