There is a newer version of the Kentucky Revised Statutes
2009 Kentucky Revised Statutes
Article 8 Investment Securities
355.8.503 Property interest of entitlement holder in financial asset held by securities intermediary.
Download pdfasset held by the securities intermediary are held by the securities intermediary for
the entitlement holders, are not property of the securities intermediary, and are not
subject to claims of creditors of the securities intermediary, except as otherwise
provided in KRS 355.8-511. (2) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) of this section is a pro rata property interest in all interests in
that financial asset held by the securities intermediary, without regard to the time
the entitlement holder acquired the security entitlement or the time the securities
intermediary acquired the interest in that financial asset. (3) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) of this section may be enforced against the securities
intermediary only by exercise of the entitlement holder's rights under KRS 355.8-
505 to 355.8-508. (4) An entitlement holder's property interest with respect to a particular financial asset under subsection (1) of this section may be enforced against a purchaser of the
financial asset or interest therein only if:
(a) Insolvency proceedings have been initiated by or against the securities intermediary; (b) The securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that
financial asset; (c) The securities intermediary violated its obligations under KRS 355.8-504 by transferring the financial asset or interest therein to the purchaser; and (d) The purchaser is not protected under subsection (5) of this section. The trustee or other liquidator, acting on behalf of all entitlement holders having
security entitlements with respect to a particular financial asset, may recover the
financial asset, or interest therein, from the purchaser. If the trustee or other
liquidator elects not to pursue that right, an entitlement holder whose security
entitlement remains unsatisfied has the right to recover its interest in the financial
asset from the purchaser. (5) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection (1) of this section, whether framed in
conversion, replevin, constructive trust, equitable lien, or other theory, may not be
asserted against any purchaser of a financial asset or interest therein who gives
value, obtains control, and does not act in collusion with the securities intermediary
in violating the securities intermediary's obligations under KRS 355.8-504. Effective: January 1, 1997
History: Created 1996 Ky. Acts ch. 130, sec. 156, effective January 1, 1997.
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