Section 7-8-404 Wrongful Registration.
253 words·~1 min read·
/al/title-7-commercial-code/part-4-registration/7-8-404·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Except as otherwise provided in Section 7-8-406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered:
(1)pursuant to an ineffective indorsement or instruction;
(2)after a demand that the issuer not register transfer became effective under Section 7-8-403(a) and the issuer did not comply with Section 7-8-403(b);
(3)after the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
(4)by an issuer acting in collusion with the wrongdoer.
(b)An issuer that is liable for wrongful registration of transfer under subsection
(a)on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer’s liability to provide the person with a like security is governed by Section 7-8-210.
(c)Except as otherwise provided in subsection
(a)or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective indorsement or instruction.