Sec. 8-404. Wrongful registration.

257 words·~1 min read·/il/chapter-810/act-5/8-404

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 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

8-403(a) and the issuer did not comply with Section 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 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.