8.8A-507 - A-507. Duty of securities intermediary to comply with entitlement order. - Virginia Statutes

§ 8.8A-507. Duty of securities intermediary to comply with entitlement order.

(a) A securities intermediary shall comply with an entitlement order if theentitlement order is originated by the appropriate person, the securitiesintermediary has had reasonable opportunity to assure itself that theentitlement order is genuine and authorized, and the securities intermediaryhas had reasonable opportunity to comply with the entitlement order. Asecurities intermediary satisfies the duty if:

(1) the securities intermediary acts with respect to the duty as agreed uponby the entitlement holder and the securities intermediary; or

(2) in the absence of agreement, the securities intermediary exercises duecare in accordance with reasonable commercial standards to comply with theentitlement order.

(b) If a securities intermediary transfers a financial asset pursuant to anineffective entitlement order, the securities intermediary shall reestablisha security entitlement in favor of the person entitled to it, and pay orcredit any payments or distributions that the person did not receive as aresult of the wrongful transfer. If the securities intermediary does notreestablish a security entitlement, the securities intermediary is liable tothe entitlement holder for damages.

(1996, c. 216.)