California Commercial Code 8503 – (a) To the extent necessary for a securities intermediary to …
(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 8511.
(b) An entitlement holder‘s property interest with respect to a particular financial asset under subdivision (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.
Terms Used In California Commercial Code 8503
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Holder: means :
California Commercial Code 1201
- Lien: A claim against real or personal property in satisfaction of a debt.
- Purchaser: means a person that takes by purchase. See California Commercial Code 1201
- Right: includes remedy. See California Commercial Code 1201
- Trustee: A person or institution holding and administering property in trust.
(c) An entitlement holder’s property interest with respect to a particular financial asset under subdivision (a) may be enforced against the securities intermediary only by exercise of the entitlement holder’s rights under Sections 8505 to 8508, inclusive.
(d) An entitlement holder’s property interest with respect to a particular financial asset under subdivision (a) may be enforced against a purchaser of the financial asset or interest therein only if all of the following conditions are met:
(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 8504 by transferring the financial asset or interest therein to the purchaser.
(4) The purchaser is not protected under subdivision (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 subdivision (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 8504.
(Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)