Okla. Stat. tit. 12A § 8-511

Current through Laws 2024, c. 453.

Section 8-511 - Priority Among Security Interests and Entitlement Holders

(a) Except as otherwise provided in subsections (b) and (c) of this section, 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.

Okla. Stat. tit. 12A, § 8-511

Added by Laws 1995, SB 522, c. 242, § 51, eff. 2/1/1996.

Oklahoma Code Comment

This Section deals with the situation where a securities intermediary becomes insolvent and has insufficient financial assets to satisfy the claims of its entitlement holders and its creditors having security interests in those financial assets. It implicates, therefore, the same considerations dealt with in Section 8-503, espousing the same philosophy that entitlement holders can prevail against a transferee of wrongfully transferred interests in financial assets only in limited circumstances. Thus, unless they acted in collusion with the dealer, persons who provide secured financing to securities dealers and obtain control of the particular financial asset are not subject to the risk that the dealer was acting wrongfully as against its customers. See UCC § 8-503(e). In this situation, the customers may have rights under the Securities Investor Protection Act.

Customer accounts with brokers and dealers are, to a certain extent, protected against loss due to insolvency of the firm by the Securities Investor Protection Act of 1970, as amended, 15 U.S.C. § 78aaa et seq. ("SIPA"). SIPA Section 3 created the Securities Investor Protection Corporation ("SIPC"), a nonprofit corporation, and all registered brokers and dealers are, with certain limited exceptions, required to be members of SIPC. SIPC is governed by a seven-member board of directors. SIPC has the power to borrow from the capital markets and the U.S. Treasury, through the S.E.C., up to $1 billion. In addition, SIPC has authority to assess its members to create a fund which is used to repay borrowing and to reimburse customers of failing member brokerage firms. In general, customer accounts are protected up to a maximum of $500,000 per customer, including not more than $100,000 with respect to claims for cash, as opposed to claims for securities.

Prior Statutory Provisions:

None.