2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 8 - Investment Securities › Part 1 - SHORT TITLE AND GENERAL MATTERS › Section 55-8-109 - 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) [55-8-108 (a) or (b) NMSA 1978].
(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 55-8-108(a) or (b) NMSA 1978.
History:
1978 Comp., § 55-8-109, enacted by Laws 1996, ch. 47, § 13.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
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 [55-8-108 NMSA 1978]. 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) [55-8-108 NMSA 1978].
3. As with the Section 8-108 [55-8-108 NMSA 1978] warranties, the warranties specified in this section may be modified by agreement under Section 1-102(3) [55-1-102 NMSA 1978].
"Adverse claim" Section 8-102(a)(1) [55-8-102 NMSA 1978]
"Appropriate person" Section 8-107 [55-8-107 NMSA 1978]
"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) [55-1-201 NMSA 1978]
"Securities account" Section 8-501 [55-8-501 NMSA 1978]
"Securities intermediary" Section 8-102(a)(14)
"Security certificate" Section 8-102(a)(16)
"Uncertificated security" Section 8-102(a)(18)