810 ILCS 5/8-108
2021 Illinois Compiled Statutes|Chapter 810 - COMMERCIAL CODE|810 ILCS 5/ - Uniform Commercial Code.|Article 8 - Investment Securities

 (from Ch. 26, par. 8-108)Sec. 8-108.     Warranties in direct holding.(a) A person who transfers a certificated security to a purchaser for  value warrants to the purchaser, and an indorser, if the transfer is by  indorsement, warrants to any subsequent purchaser, that:(1) the certificate is genuine and has not been     materially altered;(2) the transferor or indorser does not know of any     fact that might impair the validity of the security;(3) there is no adverse claim to the security;(4) the transfer does not violate any restriction on     transfer;(5) if the transfer is by indorsement, the     indorsement is made by an appropriate person, or if the indorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and(6) the transfer is otherwise effective and rightful.(b) A person who originates an instruction for registration of  transfer of an uncertificated security to a purchaser for value warrants to the  purchaser that:(1) the instruction is made by an appropriate person,     or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person;(2) the security is valid;(3) there is no adverse claim to the security; and(4) at the time the instruction is presented to the     issuer:(i) the purchaser will be entitled to the         registration of transfer;(ii) the transfer will be registered by the         issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction;(iii) the transfer will not violate any         restriction on transfer; and(iv) the requested transfer will otherwise be         effective and rightful.(c) A person who transfers an uncertificated security to a purchaser  for value and does not originate an instruction in connection with the  transfer warrants that:(1) the uncertificated security is valid;(2) there is no adverse claim to the security;(3) the transfer does not violate any restriction on     transfer; and(4) the transfer is otherwise effective and rightful.(d) A person who indorses a security certificate warrants to the  issuer that:(1) there is no adverse claim to the security; and(2) the indorsement is effective.(e) A person who originates an instruction for registration of  transfer of an uncertificated security warrants to the issuer that:(1) the instruction is effective; and(2) at the time the instruction is presented to the     issuer the purchaser will be entitled to the registration of transfer.(f) A person who presents a certificated security for registration of  transfer or for payment or exchange warrants to the issuer that the person is  entitled to the registration, payment, or exchange, but a purchaser for value  and without notice of adverse claims to whom transfer is registered warrants  only that the person has no knowledge of any unauthorized signature in a  necessary indorsement.(g) If a person acts as agent of another in delivering a certificated  security to a purchaser, the identity of the principal was known to the person  to whom the certificate was delivered, and the certificate delivered by the  agent was received by the agent from the principal or received by the agent  from another person at the direction of the principal, the person delivering  the security certificate warrants only that the delivering person has authority  to act for the principal and does not know of any adverse claim to the  certificated security.(h) A secured party who redelivers a security certificate received, or  after payment and on order of the debtor delivers the security certificate to  another person, makes only the warranties of an agent under subsection (g).(i) Except as otherwise provided in subsection (g), a broker acting  for a customer makes to the issuer and a purchaser the warranties provided  in subsections (a) through (f).  A broker that delivers a security certificate  to  its customer, or causes its customer to be registered as the owner of an  uncertificated security, makes to the customer the warranties provided in  subsection (a) or (b), and has the rights and privileges of a purchaser under  this Section.  The warranties of and in favor of the broker acting as an agent  are in addition to applicable warranties given by and in favor of the  customer.    (Source: P.A. 89-364, eff. 1-1-96.)