(810 ILCS 5/Art. 8 Pt. 5 heading) PART 5.
SECURITY ENTITLEMENTS
|
(810 ILCS 5/8-501)
Sec. 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 | ||
| ||
(2) receives a financial asset from the person or | ||
| ||
(3) becomes obligated under other law, regulation, or | ||
| ||
(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 indorsed to the other person, and has not been
indorsed 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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-502)
Sec. 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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-503)
Sec. 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 | ||
| ||
(2) the securities intermediary does not have | ||
| ||
(3) the securities intermediary violated its | ||
| ||
(4) the purchaser is not protected under subsection | ||
| ||
(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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-504)
Sec. 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 | ||
| ||
(2) in the absence of agreement, the securities | ||
| ||
(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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-505)
Sec. 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 | ||
| ||
(2) in the absence of agreement, the securities | ||
| ||
(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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-506)
Sec. 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 | ||
| ||
(2) in the absence of agreement, the securities | ||
| ||
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-507)
Sec. 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 | ||
| ||
(2) in the absence of agreement, the securities | ||
| ||
(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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-508)
Sec. 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 | ||
| ||
(2) in the absence of agreement, the securities | ||
| ||
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-509)
Sec. 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 | ||
| ||
(2) rights of the securities intermediary under other | ||
| ||
(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.
(Source: P.A. 89-364, eff. 1-1-96.)
|
(810 ILCS 5/8-510)
Sec. 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 | ||
| ||
(2) the securities intermediary's agreement to comply | ||
| ||
(3) if the purchaser obtained control through another | ||
| ||
(d) A securities intermediary as purchaser
has priority over a conflicting purchaser who has control unless otherwise
agreed by the securities intermediary.
(Source: P.A. 91-893, eff. 7-1-01.)
|
(810 ILCS 5/8-511)
Sec. 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.
(Source: P.A. 89-364, eff. 1-1-96.)
|