Warranties in indirect holding.
(a) A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that:
(1) the entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
(2) there is no adverse claim to the security entitlement.
(b) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in section 8-108(a) or (b).
(c) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in section 8-108(a) or (b).
Source:Laws 1995, LB 97, § 13.
1. Subsection (a) provides that a person who originates an entitlement order warrants to the securities intermediary that the order is authorized, and warrants the absence of adverse claims. Subsection (b) specifies the warranties that are given when a person who holds securities directly has the holding converted into indirect form. A person who delivers a certificate to a securities intermediary or originates an instruction for an uncertificated security gives to the securities intermediary the transfer warranties under section 8-108. If the securities intermediary in turn delivers the certificate to a higher level securities intermediary, it gives the same warranties.
2. Subsection (c) states the warranties that a securities intermediary gives when a customer who has been holding securities in an account with the securities intermediary requests that certificates be delivered or that uncertificated securities be registered in the customer's name. The warranties are the same as those that brokers make with respect to securities that the brokers sell to or buy on behalf of the customers. See section 8-108(i).
3. As with the section 8-108 warranties, the warranties specified in this section may be modified by agreement under section 1-102(3).
Definitional Cross References:
"Adverse claim". Section 8-102(a)(1).
"Appropriate person". Section 8-107.
"Entitlement holder". Section 8-102(a)(7).
"Entitlement order". Section 8-102(a)(8).
"Instruction". Section 8-102(a)(12).
"Person". Section 1-201(30).
"Securities account". Section 8-501.
"Securities intermediary". Section 8-102(a)(14).
"Security certificate". Section 8-102(a)(16).
"Uncertificated security". Section 8-102(a)(18).