CO Code § 4-8-205 (2021)
2021 Colorado Code|Title 4 - Uniform Commercial Code|Article 8 - Investment Securities|Part 2 - Issue and Issuer|§ 4-8-205. Effect of Unauthorized Signature on Security Certificate

 An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by:    An authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or    An employee of the issuer, or of any of the persons listed in paragraph (1) of this section, entrusted with responsible handling of the security certificate.     History. Source: L. 96: Entire article R&RE, p. 218, § 2, effective July 1.    Editor's note:   This section is similar to former § 4-8-205 as it existed prior to 1996.   OFFICIAL COMMENT   1. The problem of forged or unauthorized signatures may arise where an employee of the issuer, transfer agent, or registrar has access to securities which the employee is required to prepare for issue by affixing the corporate seal or by adding a signature necessary for issue. This section is based upon the issuer's duty to avoid the negligent entrusting of securities to such persons. Issuers have long been held responsible for signatures placed upon securities by parties whom they have held out to the public as authorized to prepare such securities. See Fifth Avenue Bank of New York v. The Forty-Second Grand Street Ferry Railroad Co., 137 N.Y. 231, 33 N.E. 378, 19 L.R.A. 331, 33 Am.St.Rep. 712 ; Jarvis v. Manhattan Beach Co., 148 N.Y. 652, 43 N.E. 68, 31 L.R.A. 776, 51 Am.St.Rep. 727 (1896). The “apparent authority” concept of some of the case-law, however, is here extended and this section expressly rejects the technical distinction, made by courts reluctant to recognize forged signatures, between cases where forgers sign signatures they are authorized to sign under proper circumstances and those in which they sign signatures they are never authorized to sign. Citizens' Southern National Bank v. Trust Co. of Georgia, 50 Ga.App. 681, 179 S.E. 278 (1935). Normally the purchaser is not in a position to determine which signature a forger, entrusted with the preparation of securities, has “apparent authority” to sign. The issuer, on the other hand, can protect itself against such fraud by the careful selection and bonding of agents and employees, or by action over against transfer agents and registrars who in turn may bond their personnel.   2. The issuer cannot be held liable for the honesty of employees not entrusted, directly or indirectly, with the signing, preparation, or responsible handling of similar securities and whose possible commission of forgery it has no reason to anticipate. The result in such cases as Hudson Trust Co. v. American Linseed Co., 232 N.Y. 350, 134 N.E. 178 (1922), and Dollar Savings Fund Trust Co. v. Pittsburgh Plate Glass Co., 213 Pa. 307, 62 A. 916, 5 Ann.Cas. 248 (1906) is here adopted.   3. This section is not concerned with forged or unauthorized indorsements, but only with unauthorized signatures of issuers, transfer agents, etc., placed upon security certificates during the course of their issue. The protection here stated is available to all purchasers for value without notice and not merely to subsequent purchasers.   Definitional Cross References:   “Certificated security”. Section 8-102(a)(4)   “Issuer”. Section 8-201   “Notice”. Section 1-201(25)   “Purchaser”. Sections 1-201(33) 8-116   “Security certificate”. Section 8-102(a)(14)   “Unauthorized signature”. Section 1-201(43)   ANNOTATION   Annotator's note. The following annotations include cases decided under former provisions similar to this section.   Where transferees are purchasers for value without notice of lack of authority, and the signing is done by the secretary of the issuer who is an employee entrusted with responsible handling of securities, it is readily apparent that facsimile signatures are effective against the issuer, and therefore, the certificates are genuine even though the signatures of the president and secretary of the issuer are unauthorized. Dempsey-Tegeler Co. v. Otis Oil Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968 ).