House Bill No. 5080
               House Bill No. 5080

              PUBLIC ACT NO. 97-182


AN   ACT   REVISING   ARTICLE  8  OF  THE  UNIFORM
COMMERCIAL CODE CONCERNING INVESTMENT SECURITIES.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Section  42a-8-101 of the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [This  article shall be known and may be cited
as    "Uniform    Commercial    Code    Investment
Securities".] THIS ARTICLE MAY BE CITED AS UNIFORM
COMMERCIAL CODE--INVESTMENT SECURITIES.
    Sec.  2.  Section  42a-8-102  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)   In  this  article  unless  the  context
otherwise requires: (a) A "certificated  security"
is  a  share,  participation, or other interest in
property of or an enterprise of the issuer  or  an
obligation  of the issuer which is (i) represented
by an instrument issued in  bearer  or  registered
form;   (ii)  of  a  type  commonly  dealt  in  on
securities  exchanges  or  markets   or   commonly
recognized  in  any  area in which it is issued or
dealt in as a medium  for  investment;  and  (iii)
either  one  of  a class or series or by its terms
divisible  into  a  class  or  series  of  shares,
participations,  interests  or obligations. (b) An
"uncertificated    security"    is    a     share,
participation, or other interest in property or an
enterprise of the issuer or an obligation  of  the
issuer   which   is  (i)  not  represented  by  an
instrument and the transfer of which is registered
upon  books  maintained  for that purpose by or on
behalf of the issuer;  (ii)  of  a  type  commonly
dealt  in  on securities exchanges or markets; and
(iii) either one of a class or series  or  by  its
terms  divisible into a class or series of shares,
participations, interests or  obligations.  (c)  A
"security"   is   either   a  certificated  or  an
uncertificated  security.   If   a   security   is
certificated,    the    terms    "security"    and
"certificated  security"  may  mean   either   the
intangible  interest,  the instrument representing
that interest, or both as the context requires.  A
writing   that   is  a  certificated  security  is
governed by this article and not by article 3 even
though  it  also  meets  the  requirements of that
article. This article does not apply to money.  If
a  certificated  security  has been retained by or
surrendered to the issuer or  its  transfer  agent
for  reasons  other than registration of transfer,
other  temporary  purpose,  payment,  exchange  or
acquisition  by the issuer, that security shall be
treated as an uncertificated security for purposes
of this article. (d) A certificated security is in
"registered form" if (i)  it  specifies  a  person
entitled  to  the  security  or  to  the rights it
represents and (ii) its transfer may be registered
upon  books  maintained  for that purpose by or on
behalf of the issuer, or the security  so  states.
(e) A certificated security is in "bearer form" if
it runs to bearer according to its terms  and  not
by reason of any endorsement.
    (2)  A  "subsequent purchaser" is a person who
takes other than by original issue.
    (3)  A "clearing corporation" is a corporation
registered  as  a  "clearing  agency"  under   the
federal  securities  laws  or a corporation (a) at
least ninety per cent of whose  capital  stock  is
held  by or for one or more organizations, none of
which, other than a national  securities  exchange
or association, holds in excess of twenty per cent
of the capital stock of the corporation, and  each
of   which   is  (i)  subject  to  supervision  or
regulation pursuant to the provisions  of  federal
or  state  banking  laws  or state insurance laws,
(ii) a broker  or  dealer  or  investment  company
registered  under  the federal securities laws, or
(iii)   a   national   securities   exchange    or
association    registered    under   the   federal
securities laws; and  (b)  any  remaining  capital
stock  of  which  is  held by individuals who have
purchased it at or prior  to  the  time  of  their
taking  office as directors of the corporation and
who have purchased only so much  of  such  capital
stock as is necessary to permit them to qualify as
directors.
    (4)  A  "custodian  bank"  is  a bank or trust
company that is supervised and examined  by  state
or federal authority having supervision over banks
and  is  acting  as  custodian  for   a   clearing
corporation.
    (5)   Other   definitions   applying  to  this
article or to  specified  parts  thereof  and  the
sections in which they appear are:
    "Adverse claim". Section 42a-8-302.
    "Bona fide purchaser". Section 42a-8-302.
    "Broker". Section 42a-8-303.
    "Debtor". Section 42a-9-105.
    "Financial intermediary". Section 42a-8-313.
    "Guarantee   of   the    signature".   Section
42a-8-402.
    "Initial   transaction   statement".   Section
42a-8-408.
    "Instruction". Section 42a-8-308.
    "Intermediary bank". Section 42a-4-105.
    "Issuer". Section 42a-8-201.
    "Overissue". Section 42a-8-104.
    "Secured party". Section 42a-9-105.
    "Security agreement". Section 42a-9-105.
    (6)  In  addition  article  1 contains general
definitions and  principles  of  construction  and
interpretation    applicable    throughout    this
article.]
    (a) IN THIS ARTICLE:
    (1)  "ADVERSE  CLAIM"  MEANS  A  CLAIM  THAT A
CLAIMANT HAS A PROPERTY INTEREST  IN  A  FINANCIAL
ASSET  AND THAT IT IS A VIOLATION OF THE RIGHTS OF
THE CLAIMANT FOR ANOTHER PERSON TO HOLD,  TRANSFER
OR DEAL WITH THE FINANCIAL ASSET.
    (2)   "BEARER   FORM",   AS   APPLIED   TO   A
CERTIFICATED SECURITY, MEANS A FORM IN  WHICH  THE
SECURITY  IS PAYABLE TO THE BEARER OF THE SECURITY
CERTIFICATE ACCORDING TO  ITS  TERMS  BUT  NOT  BY
REASON OF AN ENDORSEMENT.
    (3)  "BROKER"  MEANS  A  PERSON  DEFINED  AS A
BROKER OR  DEALER  UNDER  THE  FEDERAL  SECURITIES
LAWS,  BUT WITHOUT EXCLUDING A BANK ACTING IN THAT
CAPACITY.
    (4)  "CERTIFICATED  SECURITY" MEANS A SECURITY
THAT IS REPRESENTED BY A CERTIFICATE.
    (5) "CLEARING CORPORATION" MEANS:
    (i)   A   PERSON   THAT  IS  REGISTERED  AS  A
"CLEARING AGENCY"  UNDER  THE  FEDERAL  SECURITIES
LAWS;
    (ii) A FEDERAL RESERVE BANK; OR
    (iii)   ANY   OTHER   PERSON   THAT   PROVIDES
CLEARANCE OR SETTLEMENT SERVICES WITH  RESPECT  TO
FINANCIAL ASSETS THAT WOULD REQUIRE IT TO REGISTER
AS A CLEARING AGENCY UNDER THE FEDERAL  SECURITIES
LAWS  BUT  FOR  AN EXCLUSION OR EXEMPTION FROM THE
REGISTRATION REQUIREMENT, IF ITS ACTIVITIES  AS  A
CLEARING  CORPORATION,  INCLUDING  PROMULGATION OF
RULES, ARE SUBJECT TO REGULATION BY A  FEDERAL  OR
STATE GOVERNMENTAL AUTHORITY.
    (6) "COMMUNICATE" MEANS TO:
    (i) SEND A SIGNED WRITING; OR
    (ii)  TRANSMIT  INFORMATION  BY  ANY MECHANISM
AGREED  UPON  BY  THE  PERSONS  TRANSMITTING   AND
RECEIVING THE INFORMATION.
    (7)   "ENDORSEMENT"  MEANS  A  SIGNATURE  THAT
ALONE OR ACCOMPANIED BY OTHER WORDS IS MADE  ON  A
SECURITY  CERTIFICATE  IN  REGISTERED FORM OR ON A
SEPARATE DOCUMENT FOR THE  PURPOSE  OF  ASSIGNING,
TRANSFERRING OR REDEEMING THE SECURITY OR GRANTING
A POWER TO ASSIGN, TRANSFER OR REDEEM IT.
    (8)   "ENTITLEMENT   HOLDER"  MEANS  A  PERSON
IDENTIFIED  IN  THE  RECORDS   OF   A   SECURITIES
INTERMEDIARY  AS  THE  PERSON  HAVING  A  SECURITY
ENTITLEMENT AGAINST THE  SECURITIES  INTERMEDIARY.
IF  A  PERSON  ACQUIRES  A SECURITY ENTITLEMENT BY
VIRTUE OF SECTION  42a-8-501(b)(2)  OR  (3),  THAT
PERSON IS THE ENTITLEMENT HOLDER.
    (9)  "ENTITLEMENT  ORDER" MEANS A NOTIFICATION
COMMUNICATED   TO   A   SECURITIES    INTERMEDIARY
DIRECTING  TRANSFER  OR  REDEMPTION OF A FINANCIAL
ASSET  TO  WHICH  THE  ENTITLEMENT  HOLDER  HAS  A
SECURITY ENTITLEMENT.
    (10))  "FINANCIAL  ASSET", EXCEPT AS OTHERWISE
PROVIDED  IN  SECTION  42a-8-103,  MEANS:  (i)   A
SECURITY;  (ii)  AN  OBLIGATION  OF  A PERSON OR A
SHARE, PARTICIPATION OR OTHER INTEREST IN A PERSON
OR IN PROPERTY OR AN ENTERPRISE OF A PERSON, WHICH
IS, OR IS  OF  A  TYPE,  DEALT  IN  OR  TRADED  ON
FINANCIAL  MARKETS,  OR WHICH IS RECOGNIZED IN ANY
AREA IN WHICH IT IS ISSUED OR DEALT IN AS A MEDIUM
FOR INVESTMENT; OR (iii) ANY PROPERTY THAT IS HELD
BY A SECURITIES INTERMEDIARY FOR ANOTHER PERSON IN
A    SECURITIES    ACCOUNT   IF   THE   SECURITIES
INTERMEDIARY HAS EXPRESSLY AGREED WITH  THE  OTHER
PERSON  THAT  THE  PROPERTY  IS TO BE TREATED AS A
FINANCIAL ASSET UNDER  THIS  ARTICLE.  AS  CONTEXT
REQUIRES,  THE  TERM  MEANS  EITHER  THE  INTEREST
ITSELF OR THE MEANS BY WHICH A PERSON'S  CLAIM  TO
IT  IS  EVIDENCED,  INCLUDING  A  CERTIFICATED  OR
UNCERTIFICATED SECURITY, A  SECURITY  CERTIFICATE,
OR A SECURITY ENTITLEMENT.
    (11)   "GOOD   FAITH",  FOR  PURPOSES  OF  THE
OBLIGATION OF GOOD FAITH  IN  THE  PERFORMANCE  OR
ENFORCEMENT  OF  CONTRACTS  OR  DUTIES WITHIN THIS
ARTICLE, MEANS HONESTY IN FACT AND THE  OBSERVANCE
OF   REASONABLE   COMMERCIAL   STANDARDS  OF  FAIR
DEALING.
    (12)   "INSTRUCTION"   MEANS   A  NOTIFICATION
COMMUNICATED TO THE ISSUER  OF  AN  UNCERTIFICATED
SECURITY  WHICH  DIRECTS  THAT THE TRANSFER OF THE
SECURITY BE REGISTERED OR  THAT  THE  SECURITY  BE
REDEEMED.
    (13)   "REGISTERED  FORM",  AS  APPLIED  TO  A
CERTIFICATED SECURITY, MEANS A FORM IN WHICH:
    (i)   THE  SECURITY  CERTIFICATE  SPECIFIES  A
PERSON ENTITLED TO THE SECURITY; AND
    (ii)   A  TRANSFER  OF  THE  SECURITY  MAY  BE
REGISTERED UPON BOOKS MAINTAINED FOR THAT  PURPOSE
BY  OR  ON  BEHALF  OF THE ISSUER, OR THE SECURITY
CERTIFICATE SO STATES.
    (14) "SECURITIES INTERMEDIARY" MEANS:
    (i) A CLEARING CORPORATION; OR
    (ii)  A  PERSON,  INCLUDING  A BANK OR BROKER,
THAT  IN  THE  ORDINARY  COURSE  OF  ITS  BUSINESS
MAINTAINS  SECURITIES  ACCOUNTS  FOR OTHERS AND IS
ACTING IN THAT CAPACITY.
    (15)  "SECURITY", EXCEPT AS OTHERWISE PROVIDED
IN SECTION 42a-8-103, MEANS AN  OBLIGATION  OF  AN
ISSUER   OR   A  SHARE,  PARTICIPATION,  OR  OTHER
INTEREST  IN  AN  ISSUER  OR  IN  PROPERTY  OR  AN
ENTERPRISE OF AN ISSUER:
    (i)   WHICH   IS  REPRESENTED  BY  A  SECURITY
CERTIFICATE IN BEARER OR REGISTERED FORM,  OR  THE
TRANSFER  OF  WHICH  MAY  BE REGISTERED UPON BOOKS
MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF OF THE
ISSUER;
    (ii)  WHICH  IS ONE OF A CLASS OR SERIES OR BY
ITS TERMS IS DIVISIBLE INTO A CLASS OR  SERIES  OF
SHARES,  PARTICIPATIONS, INTERESTS OR OBLIGATIONS;
AND
    (iii) WHICH:
    (A)  IS,  OR  IS OF A TYPE, DEALT IN OR TRADED
ON SECURITIES EXCHANGES OR SECURITIES MARKETS; OR
    (B)  IS  A  MEDIUM  FOR  INVESTMENT AND BY ITS
TERMS EXPRESSLY PROVIDES THAT  IT  IS  A  SECURITY
GOVERNED BY THIS ARTICLE.
    (16)    "SECURITY    CERTIFICATE"    MEANS   A
CERTIFICATE REPRESENTING A SECURITY.
    (17)  "SECURITY  ENTITLEMENT" MEANS THE RIGHTS
AND PROPERTY INTEREST  OF  AN  ENTITLEMENT  HOLDER
WITH  RESPECT  TO  A  FINANCIAL ASSET SPECIFIED IN
PART 5.
    (18)   "UNCERTIFICATED   SECURITY"   MEANS   A
SECURITY THAT IS NOT REPRESENTED BY A CERTIFICATE.
    (b)   OTHER   DEFINITIONS   APPLYING  TO  THIS
ARTICLE AND THE SECTIONS IN WHICH THEY APPEAR ARE:
    "APPROPRIATE PERSON". SECTION 42a-8-107.
    "CONTROL". SECTION 42a-8-106.
    "DELIVERY". SECTION 42a-8-301.
    "INVESTMENT    COMPANY   SECURITY".    SECTION
42a-8-103.
    "ISSUER". SECTION 42a-8-201.
    "OVERISSUE". SECTION 26 OF THIS ACT.
    "PROTECTED PURCHASER". SECTION 42a-8-303.
    "SECURITIES ACCOUNT". SECTION 41 OF THIS ACT.
    (c)  IN  ADDITION,  ARTICLE 1 CONTAINS GENERAL
DEFINITIONS AND  PRINCIPLES  OF  CONSTRUCTION  AND
INTERPRETATION APPLICABLE THROUGHOUT THIS ARTICLE.
    (d)   THE   CHARACTERIZATION   OF   A  PERSON,
BUSINESS  OR  TRANSACTION  FOR  PURPOSES  OF  THIS
ARTICLE DOES NOT DETERMINE THE CHARACTERIZATION OF
THE PERSON, BUSINESS OR TRANSACTION  FOR  PURPOSES
OF ANY OTHER LAW, REGULATION OR RULE.
    Sec.  3.  Section  42a-8-103  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [A  lien upon a security in favor of an issuer
thereof is valid against a purchaser only if:  (a)
The  security is certificated and the right of the
issuer to the lien is noted conspicuously thereon;
or  (b)  the  security  is  uncertificated  and  a
notation of the right of the issuer to the lien is
contained  in  the  initial  transaction statement
sent to the  purchaser  or,  if  his  interest  is
transferred  to  him other than by registration of
transfer,   pledge   or   release,   the   initial
transaction statement sent to the registered owner
or the registered pledgee.]
    (a)  A SHARE OR SIMILAR EQUITY INTEREST ISSUED
BY A  CORPORATION,  BUSINESS  TRUST,  JOINT  STOCK
COMPANY OR SIMILAR ENTITY IS A SECURITY.
    (b)  AN  "INVESTMENT  COMPANY  SECURITY"  IS A
SECURITY. "INVESTMENT COMPANY  SECURITY"  MEANS  A
SHARE  OR  SIMILAR  EQUITY  INTEREST  ISSUED BY AN
ENTITY THAT IS REGISTERED AS AN INVESTMENT COMPANY
UNDER  THE  FEDERAL  INVESTMENT  COMPANY  LAWS, IN
INTEREST IN A UNIT INVESTMENT  TRUST  THAT  IS  SO
REGISTERED, OR FACE-AMOUNT CERTIFICATE ISSUED BY A
FACE-AMOUNT  CERTIFICATE  COMPANY   THAT   IS   SO
REGISTERED.  INVESTMENT  COMPANY SECURITY DOES NOT
INCLUDE AN INSURANCE POLICY OR ENDOWMENT POLICY OR
ANNUITY CONTRACT ISSUED BY AN INSURANCE COMPANY.
    (c)  AN  INTEREST  IN A PARTNERSHIP OR LIMITED
LIABILITY COMPANY IS NOT A SECURITY UNLESS  IT  IS
DEALT  IN  OR TRADED ON SECURITIES EXCHANGES OR IN
SECURITIES MARKETS, ITS  TERMS  EXPRESSLY  PROVIDE
THAT  IT IS A SECURITY GOVERNED BY THIS ARTICLE OR
IT IS AN INVESTMENT COMPANY SECURITY. HOWEVER,  AN
INTEREST  IN  A  PARTNERSHIP  OR LIMITED LIABILITY
COMPANY IS A FINANCIAL ASSET IF IT IS  HELD  IN  A
SECURITIES ACCOUNT.
    (d)  A  WRITING THAT IS A SECURITY CERTIFICATE
IS GOVERNED BY THIS ARTICLE AND NOT BY ARTICLE  3,
EVEN THOUGH IT ALSO MEETS THE REQUIREMENTS OF THAT
ARTICLE. HOWEVER, A NEGOTIABLE INSTRUMENT GOVERNED
BY ARTICLE 3 IS A FINANCIAL ASSET IF IT IS HELD IN
A SECURITIES ACCOUNT.
    (e)  AN OPTION OR SIMILAR OBLIGATION ISSUED BY
A CLEARING CORPORATION TO ITS PARTICIPANTS IS  NOT
A SECURITY, BUT IS A FINANCIAL ASSET.
    (f)   A  COMMODITY  CONTRACT,  AS  DEFINED  IN
SECTION 55 OF THIS ACT, IS NOT  A  SECURITY  OR  A
FINANCIAL ASSET.
    Sec.  4.  Section  42a-8-104  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  The  provisions  of  this  article which
validate a security or compel its issue or reissue
do  not apply to the extent that validation, issue
or reissue would result in overissue; but if:  (a)
An identical security which does not constitute an
overissue is reasonably  available  for  purchase,
the  person  entitled  to  issue or validation may
compel the issuer to purchase the security for him
and  either  to deliver a certificated security or
to register  the  transfer  of  an  uncertificated
security   to   him,   against  surrender  of  any
certificated security he holds; or (b) a  security
is  not  so  available  for  purchase,  the person
entitled to issue or validation may  recover  from
the  issuer the price he or the last purchaser for
value paid for it with interest from the  date  of
his demand.
    (2)  "Overissue" means the issue of securities
in excess of the amount the issuer  has  corporate
power to issue.]
    (a)   A  PERSON  ACQUIRES  A  SECURITY  OR  AN
INTEREST THEREIN, UNDER THIS ARTICLE, IF:
    (1)  THE  PERSON  IS  A  PURCHASER  TO  WHOM A
SECURITY  IS   DELIVERED   PURSUANT   TO   SECTION
42a-8-301; OR
    (2)    THE    PERSON   ACQUIRES   A   SECURITY
ENTITLEMENT TO THE SECURITY PURSUANT TO SECTION 41
OF THIS ACT.
    (b)  A  PERSON  ACQUIRES  A  FINANCIAL  ASSET,
OTHER THAN A SECURITY,  OR  AN  INTEREST  THEREIN,
UNDER  THIS  ARTICLE,  IF  THE  PERSON  ACQUIRES A
SECURITY ENTITLEMENT TO THE FINANCIAL ASSET.
    (c)   A   PERSON   WHO   ACQUIRES  A  SECURITY
ENTITLEMENT TO A SECURITY OR OTHER FINANCIAL ASSET
HAS  THE  RIGHTS  SPECIFIED  IN  PART  5, BUT IS A
PURCHASER OF ANY SECURITY,  SECURITY  ENTITLEMENT,
OR  OTHER  FINANCIAL  ASSET HELD BY THE SECURITIES
INTERMEDIARY  ONLY  TO  THE  EXTENT  PROVIDED   IN
SECTION 43 OF THIS ACT.
    (d)  UNLESS THE CONTEXT SHOWS THAT A DIFFERENT
MEANING IS INTENDED, A PERSON WHO IS  REQUIRED  BY
OTHER   LAW,  REGULATION,  RULE  OR  AGREEMENT  TO
TRANSFER, DELIVER, PRESENT, SURRENDER, EXCHANGE OR
OTHERWISE  PUT IN THE POSSESSION OF ANOTHER PERSON
A  SECURITY  OR  FINANCIAL  ASSET  SATISFIES  THAT
REQUIREMENT BY CAUSING THE OTHER PERSON TO ACQUIRE
AN INTEREST IN THE  SECURITY  OR  FINANCIAL  ASSET
PURSUANT TO SUBSECTION (a) OR (b) OF THIS SECTION.
    Sec.  5.  Section  42a-8-105  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  Certificated securities governed by this
article are negotiable instruments.
    (2)  Statements  (section  42a-8-408), notices
or the like, sent by the issuer of  uncertificated
securities  and  instructions  (section 42a-8-308)
are    neither    negotiable    instruments    nor
certificated securities.
    (3)  In  any  action on a security: (a) Unless
specifically  denied  in   the   pleadings,   each
signature   on   a  certificated  security,  in  a
necessary endorsement, on an  initial  transaction
statement  or  on an instruction, is admitted; (b)
if the effectiveness of  a  signature  is  put  in
issue  the  burden  of  establishing  it is on the
party  claiming  under  the  signature   but   the
signature is presumed to be genuine or authorized;
(c) if signatures on a certificated  security  are
admitted   or   established,   production  of  the
security entitles a holder to recover on it unless
the  defendant  establishes  a defense or a defect
going to the validity  of  the  security;  (d)  if
signatures on an initial transaction statement are
admitted or established, the facts stated  in  the
statement  are  presumed to be true as of the time
of its issuance; and (e) after it is shown that  a
defense  or  defect  exists, the plaintiff has the
burden of establishing  that  he  or  some  person
under  whom he claims is a person against whom the
defense or defect is ineffective.]
    (a)  A  PERSON  HAS NOTICE OF AN ADVERSE CLAIM
IF:
    (1) THE PERSON KNOWS OF THE ADVERSE CLAIM;
    (2)  THE  PERSON  IS AWARE OF FACTS SUFFICIENT
TO  INDICATE   THAT   THERE   IS   A   SIGNIFICANT
PROBABILITY  THAT  THE  ADVERSE  CLAIM  EXISTS AND
DELIBERATELY   AVOIDS   INFORMATION   THAT   WOULD
ESTABLISH THE EXISTENCE OF THE ADVERSE CLAIM; OR
    (3)  THE PERSON HAS A DUTY, IMPOSED BY STATUTE
OR REGULATION, TO INVESTIGATE WHETHER  AN  ADVERSE
CLAIM  EXISTS,  AND  THE INVESTIGATION SO REQUIRED
WOULD  ESTABLISH  THE  EXISTENCE  OF  THE  ADVERSE
CLAIM.
    (b)  HAVING  KNOWLEDGE  THAT A FINANCIAL ASSET
OR INTEREST THEREIN IS OR HAS BEEN TRANSFERRED  BY
A  REPRESENTATIVE  IMPOSES NO DUTY OF INQUIRY INTO
THE RIGHTFULNESS  OF  A  TRANSACTION  AND  IS  NOT
NOTICE  OF AN ADVERSE CLAIM. HOWEVER, A PERSON WHO
KNOWS THAT  A  REPRESENTATIVE  HAS  TRANSFERRED  A
FINANCIAL   ASSET   OR   INTEREST   THEREIN  IN  A
TRANSACTION THAT IS, OR WHOSE PROCEEDS  ARE  BEING
USED,   FOR   THE   INDIVIDUAL   BENEFIT   OF  THE
REPRESENTATIVE OR OTHERWISE IN BREACH OF DUTY  HAS
NOTICE OF AN ADVERSE CLAIM.
    (c)  AN  ACT  OR EVENT THAT CREATES A RIGHT TO
IMMEDIATE PERFORMANCE OF THE PRINCIPAL  OBLIGATION
REPRESENTED  BY  A  SECURITY CERTIFICATE OR SETS A
DATE ON OR AFTER WHICH THE CERTIFICATE  IS  TO  BE
PRESENTED   OR   SURRENDERED   FOR  REDEMPTION  OR
EXCHANGE DOES NOT ITSELF CONSTITUTE NOTICE  OF  AN
ADVERSE  CLAIM  EXCEPT  IN  THE CASE OF A TRANSFER
MORE THAN:
    (1)  ONE YEAR AFTER A DATE SET FOR PRESENTMENT
OR SURRENDER FOR REDEMPTION OR EXCHANGE; OR
    (2)  SIX  MONTHS  AFTER A DATE SET FOR PAYMENT
OF MONEY AGAINST PRESENTATION OR SURRENDER OF  THE
CERTIFICATE, IF MONEY WAS AVAILABLE FOR PAYMENT ON
THAT DATE.
    (d)  A  PURCHASER  OF  A CERTIFICATED SECURITY
HAS NOTICE OF AN ADVERSE  CLAIM  IF  THE  SECURITY
CERTIFICATE:
    (1)  WHETHER IN BEARER OR REGISTERED FORM, HAS
BEEN ENDORSED "FOR COLLECTION" OR "FOR  SURRENDER"
OR  FOR SOME OTHER PURPOSE NOT INVOLVING TRANSFER;
OR
    (2)  IS  IN  BEARER  FORM  AND  HAS  ON  IT AN
UNAMBIGUOUS STATEMENT THAT IT IS THE PROPERTY OF A
PERSON  OTHER  THAN  THE  TRANSFEROR, BUT THE MERE
WRITING OF A NAME ON THE CERTIFICATE IS NOT SUCH A
STATEMENT.
    (e)  FILING  OF  A  FINANCING  STATEMENT UNDER
ARTICLE 9 IS NOT NOTICE OF AN ADVERSE CLAIM  TO  A
FINANCIAL ASSET.
    Sec.  6.  Section  42a-8-106  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [The  law,  including  the  conflict  of  laws
rules, of the jurisdiction of organization of  the
issuer  governs  the  validity  of a security, the
effectiveness of registration by  the  issuer  and
the  rights  and duties of the issuer with respect
to: (a) Registration of transfer of a certificated
security; (b) registration of transfer, pledge, or
release of an  uncertificated  security;  and  (c)
sending    of    statements    of   uncertificated
securities.]
    (a)   A   PURCHASER   HAS   "CONTROL"   OF   A
CERTIFICATED  SECURITY  IN  BEARER  FORM  IF   THE
CERTIFICATED   SECURITY   IS   DELIVERED   TO  THE
PURCHASER.
    (b)   A   PURCHASER   HAS   "CONTROL"   OF   A
CERTIFICATED SECURITY IN REGISTERED  FORM  IF  THE
CERTIFICATED   SECURITY   IS   DELIVERED   TO  THE
PURCHASER, AND:
    (1)   THE   CERTIFICATE  IS  ENDORSED  TO  THE
PURCHASER OR IN BLANK BY AN EFFECTIVE ENDORSEMENT;
OR
    (2)  THE CERTIFICATE IS REGISTERED IN THE NAME
OF  THE  PURCHASER,   UPON   ORIGINAL   ISSUE   OR
REGISTRATION OF TRANSFER BY THE ISSUER.
    (c)   A   PURCHASER   HAS   "CONTROL"   OF  AN
UNCERTIFICATED SECURITY IF:
    (1)  THE  UNCERTIFICATED SECURITY IS DELIVERED
TO THE PURCHASER; OR
    (2)  THE ISSUER HAS AGREED THAT IT WILL COMPLY
WITH  INSTRUCTIONS  ORIGINATED  BY  THE  PURCHASER
WITHOUT FURTHER CONSENT BY THE REGISTERED OWNER.
    (d)  A  PURCHASER  HAS "CONTROL" OF A SECURITY
ENTITLEMENT IF:
    (1)  THE  PURCHASER  BECOMES  THE  ENTITLEMENT
HOLDER; OR
    (2)  THE  SECURITIES  INTERMEDIARY  HAS AGREED
THAT  IT  WILL  COMPLY  WITH  ENTITLEMENT   ORDERS
ORIGINATED   BY   THE  PURCHASER  WITHOUT  FURTHER
CONSENT BY THE ENTITLEMENT HOLDER.
    (e)  IF  AN INTEREST IN A SECURITY ENTITLEMENT
IS  GRANTED  BY  THE  ENTITLEMENT  HOLDER  TO  THE
ENTITLEMENT  HOLDER'S OWN SECURITIES INTERMEDIARY,
THE SECURITIES INTERMEDIARY HAS CONTROL.
    (f)   A   PURCHASER   WHO  HAS  SATISFIED  THE
REQUIREMENTS OF SUBSECTION  (c)(2)  OR  (d)(2)  OF
THIS  SECTION  HAS  CONTROL EVEN IF THE REGISTERED
OWNER IN THE CASE OF  SUBSECTION  (c)(2)  OF  THIS
SECTION  OR  THE ENTITLEMENT HOLDER IN THE CASE OF
SUBSECTION (d)(2)  OF  THIS  SECTION  RETAINS  THE
RIGHT TO MAKE SUBSTITUTIONS FOR THE UNCERTIFICATED
SECURITY OR  SECURITY  ENTITLEMENT,  TO  ORIGINATE
INSTRUCTIONS  OR  ENTITLEMENT ORDERS TO THE ISSUER
OR SECURITIES INTERMEDIARY, OR OTHERWISE  TO  DEAL
WITH   THE  UNCERTIFICATED  SECURITY  OR  SECURITY
ENTITLEMENT.
    (g)  AN  ISSUER  OR  A SECURITIES INTERMEDIARY
MAY NOT  ENTER  INTO  AN  AGREEMENT  OF  THE  KIND
DESCRIBED  IN  SUBSECTION (c)(2) OR (d)(2) OF THIS
SECTION WITHOUT  THE  CONSENT  OF  THE  REGISTERED
OWNER  OR  ENTITLEMENT  HOLDER, BUT AN ISSUER OR A
SECURITIES INTERMEDIARY IS NOT REQUIRED  TO  ENTER
INTO  SUCH AN AGREEMENT EVEN THOUGH THE REGISTERED
OWNER OR ENTITLEMENT HOLDER SO DIRECTS. AN  ISSUER
OR  SECURITIES  INTERMEDIARY THAT HAS ENTERED INTO
SUCH AN AGREEMENT IS NOT REQUIRED TO  CONFIRM  THE
EXISTENCE OF THE AGREEMENT TO ANOTHER PARTY UNLESS
REQUESTED TO DO SO  BY  THE  REGISTERED  OWNER  OR
ENTITLEMENT HOLDER.
    Sec.  7.  Section  42a-8-107  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  Unless  otherwise  agreed and subject to
any applicable law or regulation respecting  short
sales,  a  person obligated to transfer securities
may transfer  any  certificated  security  of  the
specified  issue  in  bearer form or registered in
the name of the transferee or endorsed to  him  or
in   blank,  or  he  may  transfer  an  equivalent
uncertificated security to  the  transferee  or  a
person designated by the transferee.
    (2)  If the buyer fails to pay the price as it
comes due under a contract of sale, the seller may
recover  the price of: (a) Certificated securities
accepted  by   the   buyer;   (b)   uncertificated
securities that have been transferred to the buyer
or a person designated by the buyer; and (c) other
securities  if  efforts  at  their resale would be
unduly  burdensome  or  if  there  is  no  readily
available market for their resale.]
    (a) "APPROPRIATE PERSON" MEANS:
    (1)   WITH  RESPECT  TO  AN  ENDORSEMENT,  THE
PERSON SPECIFIED BY A SECURITY CERTIFICATE  OR  BY
AN EFFECTIVE SPECIAL ENDORSEMENT TO BE ENTITLED TO
THE SECURITY;
    (2)   WITH  RESPECT  TO  AN  INSTRUCTION,  THE
REGISTERED OWNER OF AN UNCERTIFICATED SECURITY;
    (3)  WITH RESPECT TO AN ENTITLEMENT ORDER, THE
ENTITLEMENT HOLDER;
    (4)  IF  THE  PERSON DESIGNATED IN SUBDIVISION
(1), (2) OR (3) OF THIS  SUBSECTION  IS  DECEASED,
THE  DESIGNATED  PERSON'S  SUCCESSOR  TAKING UNDER
OTHER LAW  OR  THE  DESIGNATED  PERSON'S  PERSONAL
REPRESENTATIVE   ACTING  FOR  THE  ESTATE  OF  THE
DECEDENT; OR
    (5)  IF  THE  PERSON DESIGNATED IN SUBDIVISION
(1), (2) OR (3) OF THIS SUBSECTION LACKS CAPACITY,
THE  DESIGNATED PERSON'S GUARDIAN, CONSERVATOR, OR
OTHER SIMILAR REPRESENTATIVE WHO HAS  POWER  UNDER
OTHER  LAW  TO  TRANSFER THE SECURITY OR FINANCIAL
ASSET.
    (b)    AN    ENDORSEMENT,    INSTRUCTION    OR
ENTITLEMENT ORDER IS EFFECTIVE IF:
    (1) IT IS MADE BY THE APPROPRIATE PERSON;
    (2)  IT  IS  MADE  BY  A  PERSON WHO HAS POWER
UNDER THE LAW OF AGENCY TO TRANSFER  THE  SECURITY
OR  FINANCIAL  ASSET  ON BEHALF OF THE APPROPRIATE
PERSON, INCLUDING, IN THE CASE OF  AN  INSTRUCTION
OR  ENTITLEMENT  ORDER,  A  PERSON WHO HAS CONTROL
UNDER SECTION 42a-8-106(c)(2) OR  42a-8-106(d)(2);
OR
    (3)  THE APPROPRIATE PERSON HAS RATIFIED IT OR
IS  OTHERWISE   PRECLUDED   FROM   ASSERTING   ITS
INEFFECTIVENESS.
    (c)    AN    ENDORSEMENT,    INSTRUCTION    OR
ENTITLEMENT ORDER  MADE  BY  A  REPRESENTATIVE  IS
EFFECTIVE EVEN IF:
    (1)  THE  REPRESENTATIVE  HAS FAILED TO COMPLY
WITH A CONTROLLING INSTRUMENT OR WITH THE  LAW  OF
THE    STATE    HAVING    JURISDICTION    OF   THE
REPRESENTATIVE  RELATIONSHIP,  INCLUDING  ANY  LAW
REQUIRING   THE  REPRESENTATIVE  TO  OBTAIN  COURT
APPROVAL OF THE TRANSACTION; OR
    (2)  THE REPRESENTATIVE'S ACTION IN MAKING THE
ENDORSEMENT, INSTRUCTION OR ENTITLEMENT  ORDER  OR
USING THE PROCEEDS OF THE TRANSACTION IS OTHERWISE
A BREACH OF DUTY.
    (d)  IF  A  SECURITY IS REGISTERED IN THE NAME
OF OR SPECIALLY ENDORSED TO A PERSON DESCRIBED  AS
A  REPRESENTATIVE,  OR  IF A SECURITIES ACCOUNT IS
MAINTAINED IN THE NAME OF A PERSON DESCRIBED AS  A
REPRESENTATIVE,  AN  ENDORSEMENT,  INSTRUCTION  OR
ENTITLEMENT ORDER MADE BY THE PERSON IS  EFFECTIVE
EVEN THOUGH THE PERSON IS NO LONGER SERVING IN THE
DESCRIBED CAPACITY.
    (e)    EFFECTIVENESS    OF   AN   ENDORSEMENT,
INSTRUCTION OR ENTITLEMENT ORDER IS DETERMINED  AS
OF   THE  DATE  THE  ENDORSEMENT,  INSTRUCTION  OR
ENTITLEMENT ORDER IS  MADE,  AND  AN  ENDORSEMENT,
INSTRUCTION  OR  ENTITLEMENT ORDER DOES NOT BECOME
INEFFECTIVE BY  REASON  OF  ANY  LATER  CHANGE  OF
CIRCUMSTANCES.
    Sec.  8.  (NEW)  (a)  A person who transfers a
certificated security to  a  purchaser  for  value
warrants to the purchaser, and an endorser, if the
transfer  is  by  endorsement,  warrants  to   any
subsequent purchaser, that:
    (1)  The  certificate  is  genuine and has not
been materially altered;
    (2)  The  transferor or endorser does not know
of any fact that might impair the validity of  the
security;
    (3)   There   is   no  adverse  claim  to  the
security;
    (4)   The   transfer   does  not  violate  any
restriction on transfer;
    (5)  If  the  transfer  is by endorsement, the
endorsement is made by an appropriate  person,  or
if  the  endorsement is by an agent, the agent has
actual  authority  to  act  on   behalf   of   the
appropriate person; and
    (6)  The  transfer  is otherwise effective and
rightful.
    (b)  A  person  who  originates an instruction
for registration of transfer of an  uncertificated
security  to a purchaser for value warrants to the
purchaser that:
    (1)  The instruction is made by an appropriate
person, or if the instruction is by an agent,  the
agent has actual authority to act on behalf of the
appropriate person;
    (2) The security is valid;
    (3)   There   is   no  adverse  claim  to  the
security; and
    (4)  At  the time the instruction is presented
to the issuer:
    (i)  The  purchaser  will  be  entitled to the
registration of transfer;
    (ii)  The  transfer  will be registered by the
issuer free from all  liens,  security  interests,
restrictions and claims other than those specified
in the instruction;
    (iii)   The  transfer  will  not  violate  any
restriction on transfer; and
    (iv)  The requested transfer will otherwise be
effective and rightful.
    (c)  A  person who transfers an uncertificated
security to a purchaser for  value  and  does  not
originate  an  instruction  in connection with the
transfer warrants that:
    (1) The uncertificated security is valid;
    (2)   There   is   no  adverse  claim  to  the
security;
    (3)   The   transfer   does  not  violate  any
restriction on transfer; and
    (4)  The  transfer  is otherwise effective and
rightful.
    (d)   A   person   who   endorses  a  security
certificate warrants to the issuer that:
    (1)   There   is   no  adverse  claim  to  the
security; and
    (2) The endorsement is effective.
    (e)  A  person  who  originates an instruction
for registration of transfer of an  uncertificated
security warrants to the issuer that:
    (1) The instruction is effective; and
    (2)  At  the time the instruction is presented
to the issuer the purchaser will  be  entitled  to
the registration of transfer.
    (f)  A  person  who  presents  a  certificated
security  for  registration  of  transfer  or  for
payment  or  exchange  warrants to the issuer that
the  person  is  entitled  to  the   registration,
payment or exchange, but a purchaser for value and
without notice of adverse claims to whom  transfer
is registered warrants only that the person has no
knowledge  of  any  unauthorized  signature  in  a
necessary endorsement.
    (g)  If  a  person acts as agent of another in
delivering a certificated security to a purchaser,
the  identity  of  the  principal was known to the
person to whom the certificate was delivered,  and
the   certificate   delivered  by  the  agent  was
received  by  the  agent  from  the  principal  or
received  by  the agent from another person at the
direction of the principal, the person  delivering
the  security  certificate  warrants only that the
delivering person has authority  to  act  for  the
principal  and  does not know of any adverse claim
to the certificated security.
    (h)  A secured party who redelivers a security
certificate received,  or  after  payment  and  on
order   of   the   debtor  delivers  the  security
certificate to  another  person,  makes  only  the
warranties  of  an  agent  under subsection (g) of
this section.
    (i)    Except   as   otherwise   provided   in
subsection (g) of this section,  a  broker  acting
for  a  customer  makes  to  the  issuer  and to a
purchaser the warranties provided  in  subsections
(a)  to  (f), inclusive, of this section. A broker
that  delivers  a  security  certificate  to   its
customer,  or causes its customer to be registered
as the owner of an uncertificated security,  makes
to   the   customer  the  warranties  provided  in
subsection (a) or (b) of this section, and has the
rights  and  privileges  of a purchaser under this
section. The warranties of and  in  favor  of  the
broker  acting  as  an  agent  are  in addition to
applicable warranties given by and in favor of the
customer.
    Sec.  9.  (NEW) (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  42a-8-108(a) or 42a-8-108(b)
of the general statutes.
    (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
42a-8-108(a)  or  42a-8-108(b)   of   the  general
statutes.
    Sec.  10.  (NEW)  (a)  The  local  law  of the
issuer's jurisdiction, as specified in  subsection
(d) of this section, governs:
    (1) The validity of a security;
    (2)  The  rights and duties of the issuer with
respect to registration of transfer;
    (3)   The  effectiveness  of  registration  of
transfer by the issuer;
    (4)  Whether  the issuer owes any duties to an
adverse claimant to a security; and
    (5)  Whether  an adverse claim can be asserted
against  a  person   to   whom   transfer   of   a
certificated   or   uncertificated   security   is
registered or person who  obtains  control  of  an
uncertificated security.
    (b)   The   local   law   of   the  securities
intermediary's  jurisdiction,  as   specified   in
subsection (e) of this section, governs:
    (1)  Acquisition  of  a  security  entitlement
from the securities intermediary;
    (2)  The  rights  and duties of the securities
intermediary and entitlement holder arising out of
a security entitlement;
    (3)  Whether  the securities intermediary owes
any duties to an adverse claimant  to  a  security
entitlement; and
    (4)  Whether  an adverse claim can be asserted
against  a  person   who   acquires   a   security
entitlement  from the securities intermediary or a
person who purchases  a  security  entitlement  or
interest therein from an entitlement holder.
    (c)  The  local  law  of  the  jurisdiction in
which a security certificate  is  located  at  the
time  of delivery governs whether an adverse claim
can be asserted  against  a  person  to  whom  the
security certificate is delivered.
    (d)    "Issuer's   jurisdiction"   means   the
jurisdiction  under  which  the  issuer   of   the
security  is organized or, if permitted by the law
of  that  jurisdiction,   the   law   of   another
jurisdiction  specified  by  the issuer. An issuer
organized under the law of this state may  specify
the   law  of  another  jurisdiction  as  the  law
governing the matters  specified  in  subdivisions
(2)  to  (5), inclusive, of subsection (a) of this
section.
    (e)    The   following   rules   determine   a
"securities   intermediary's   jurisdiction"   for
purposes of this section:
    (1)  If  an  agreement  between the securities
intermediary and its entitlement holder  specifies
that  it  is  governed  by the law of a particular
jurisdiction, that jurisdiction is the  securities
intermediary's jurisdiction.
    (2)  If  an  agreement  between the securities
intermediary and its entitlement holder  does  not
specify   the   governing   law   as  provided  in
subdivision (1) of this subsection, but  expressly
specifies   that   the   securities   account   is
maintained  at   an   office   in   a   particular
jurisdiction,  that jurisdiction is the securities
intermediary's jurisdiction.
    (3)  If  an  agreement  between the securities
intermediary and its entitlement holder  does  not
specify  a jurisdiction as provided in subdivision
(1) or (2)  of  this  subsection,  the  securities
intermediary's jurisdiction is the jurisdiction in
which located the office identified in an  account
statement  as  the  office serving the entitlement
holder's account.
    (4)  If  an  agreement  between the securities
intermediary and its entitlement holder  does  not
specify  a jurisdiction as provided in subdivision
(1) or (2)  of  this  subsection  and  an  account
statement  does not identify an office serving the
entitlement  holder's  account  as   provided   in
subdivision (3) of this subsection, the securities
intermediary's jurisdiction is the jurisdiction in
which is located the chief executive office of the
securities intermediary.
    (f)  A  securities intermediary's jurisdiction
is not determined  by  the  physical  location  of
certificates  representing financial assets, or by
the jurisdiction in which is organized the  issuer
of  the  financial  asset with respect to which an
entitlement holder has a security entitlement,  or
by  the location of facilities for data processing
or other record keeping concerning the account.
    Sec.  11.  (NEW)  A rule adopted by a clearing
corporation governing rights and obligations among
the  clearing  corporation and its participants in
the clearing corporation is effective even if  the
rule  conflicts  with this act and affects another
party who does not consent to the rule.
    Sec.  12.  (NEW)  (a) The interest of a debtor
in a certificated security may  be  reached  by  a
creditor  only  by  actual seizure of the security
certificate by the officer making  the  attachment
or   levy,   except   as   otherwise  provided  in
subsection  (d)  of  this  section.   However,   a
certificated  security  for  which the certificate
has been surrendered to the issuer may be  reached
by a creditor by legal process upon the issuer.
    (b)   The   interest   of   a   debtor  in  an
uncertificated  security  may  be  reached  by   a
creditor  only by legal process upon the issuer at
its chief executive office in the  United  States,
except  as otherwise provided in subsection (d) of
this section.
    (c)  The  interest  of  a debtor in a security
entitlement may be reached by a creditor  only  by
legal  process  upon  the  securities intermediary
with  whom  the  debtor's  securities  account  is
maintained,   except   as  otherwise  provided  in
subsection (d) of this section.
    (d)   The   interest   of   a   debtor   in  a
certificated security for which the certificate is
in  the  possession  of  a secured party, or in an
uncertificated security registered in the name  of
a   secured   party,  or  a  security  entitlement
maintained in the name of a secured party, may  be
reached  by  a  creditor by legal process upon the
secured party.
    (e)  A creditor whose debtor is the owner of a
certificated security, uncertificated security  or
security  entitlement  is  entitled  to aid from a
court of competent jurisdiction, by injunction  or
otherwise,  in reaching the certificated security,
uncertificated security or security entitlement or
in satisfying the claim by means allowed at law or
in  equity  in  regard  to  property  that  cannot
readily be reached by other legal process.
    Sec.  13.  (NEW) A contract or modification of
a contract for the sale or purchase of a  security
is  enforceable  whether or not there is a writing
signed or record authenticated by a party  against
whom  enforcement  is sought, even if the contract
or modification  is  not  capable  of  performance
within one year of its making.
    Sec.  14.  (NEW)  The following rules apply in
an action on a certificated security  against  the
issuer:
    (1)   Unless   specifically   denied   in  the
pleadings,   each   signature   on   a    security
certificate  or  in  a  necessary  endorsement  is
admitted.
    (2)  If  the  effectiveness  of a signature is
put  in  issue,   the   burden   of   establishing
effectiveness  is  on the party claiming under the
signature, but the signature  is  presumed  to  be
genuine or authorized.
    (3)  If  signatures  on a security certificate
are admitted or  established,  production  of  the
certificate  entitles  a  holder  to recover on it
unless the defendant establishes a  defense  or  a
defect going to the validity of the security.
    (4)  If  it  is shown that a defense or defect
exists,  the   plaintiff   has   the   burden   of
establishing  that  the  plaintiff  or some person
under  whom  the  plaintiff  claims  is  a  person
against  whom  the  defense  or  defect  cannot be
asserted.
    Sec.  15. (NEW) A securities intermediary that
has transferred a financial asset pursuant  to  an
effective  entitlement order, or a broker or other
agent or bailee that has dealt  with  a  financial
asset   at   the  direction  of  its  customer  or
principal, is not liable to  a  person  having  an
adverse  claim  to the financial asset, unless the
securities intermediary, or broker or other  agent
or bailee:
    (1)  Took  the action after it had been served
with an injunction,  restraining  order  or  other
legal  process  enjoining it from doing so, issued
by a court of competent jurisdiction; or
    (2)  Acted  in collusion with the wrongdoer in
violating the rights of the adverse claimant; or
    (3)  In  the  case  of  a security certificate
that has been stolen, acted  with  notice  of  the
adverse claim.
    Sec.  16. (NEW) A securities intermediary that
receives  a  financial  asset  and  establishes  a
security  entitlement  to  the  financial asset in
favor of an entitlement holder is a purchaser  for
value   of   the  financial  asset.  A  securities
intermediary that acquires a security  entitlement
to  a  financial  asset  from  another  securities
intermediary acquires the security entitlement for
value if the securities intermediary acquiring the
security  entitlement   establishes   a   security
entitlement  to the financial asset in favor of an
entitlement holder.
    Sec.  17.  Section  42a-8-201  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)   With   respect  to  obligations  on  or
defenses to a security, "issuer" includes a person
who:  (a)  Places or authorizes the placing of his
name on a certificated security, otherwise than as
authenticating  trustee, registrar, transfer agent
or the like, to  evidence  that  it  represents  a
share,  participation  or  other  interest  in his
property or in an enterprise or  to  evidence  his
duty  to  perform an obligation represented by the
certificated   security;   (b)   creates   shares,
participations  or other interests in his property
or in an  enterprise  or  undertakes  obligations,
which   shares,   participations,   interests   or
obligations  are  uncertificated  securities;  (c)
directly    or   indirectly   creates   fractional
interests  in  his  rights  or   property,   which
fractional    interests    are    represented   by
certificated   securities;    or    (d)    becomes
responsible  for  or  in place of any other person
described as an issuer in this section.
    (2)   With   respect   to  obligations  on  or
defenses to a security, a guarantor is  an  issuer
to  the extent of his guaranty, whether or not his
obligation is noted on a certificated security  or
on  statements  of  uncertificated securities sent
pursuant to section 42a-8-408.
    (3)  With respect to registration of transfer,
pledge or release as provided by part  4  of  this
article,  "issuer"  means a person on whose behalf
transfer books are maintained.]
    (a)  WITH  RESPECT  TO  AN  OBLIGATION ON OR A
DEFENSE TO A  SECURITY,  AN  "ISSUER"  INCLUDES  A
PERSON THAT:
    (1)  PLACES  OR  AUTHORIZES THE PLACING OF ITS
NAME ON A  SECURITY  CERTIFICATE,  OTHER  THAN  AS
AUTHENTICATING TRUSTEE, REGISTRAR, TRANSFER AGENT,
OR THE LIKE, TO EVIDENCE A SHARE, PARTICIPATION OR
OTHER   INTEREST   IN   ITS   PROPERTY  OR  IN  AN
ENTERPRISE, OR TO EVIDENCE ITS DUTY TO PERFORM  AN
OBLIGATION REPRESENTED BY THE CERTIFICATE;
    (2)  CREATES  A  SHARE, PARTICIPATION OR OTHER
INTEREST IN ITS PROPERTY OR IN AN  ENTERPRISE,  OR
UNDERTAKES    AN    OBLIGATION,    THAT    IS   AN
UNCERTIFICATED SECURITY;
    (3)   DIRECTLY   OR   INDIRECTLY   CREATES   A
FRACTIONAL INTEREST IN ITS RIGHTS OR PROPERTY,  IF
THE   FRACTIONAL  INTEREST  IS  REPRESENTED  BY  A
SECURITY CERTIFICATE; OR
    (4)  BECOMES  RESPONSIBLE FOR, OR IN PLACE OF,
ANOTHER PERSON DESCRIBED  AS  AN  ISSUER  IN  THIS
SECTION.
    (b)  WITH  RESPECT  TO  AN  OBLIGATION  ON  OR
DEFENSE TO A SECURITY, A GUARANTOR IS AN ISSUER TO
THE  EXTENT  OF  ITS  GUARANTY, WHETHER OR NOT ITS
OBLIGATION IS NOTED ON A SECURITY CERTIFICATE.
    (c)  WITH  RESPECT  TO  A  REGISTRATION  OF  A
TRANSFER, ISSUER MEANS A PERSON  ON  WHOSE  BEHALF
TRANSFER BOOKS ARE MAINTAINED.
    Sec.  18.  Section  42a-8-202  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  Even  against  a purchaser for value and
without notice, the terms of a  security  include:
(a)  If the security is certificated, those stated
on  the  security;  (b)   if   the   security   is
uncertificated,  those  contained  in  the initial
transaction statement sent to such  purchaser,  or
if  his  interest is transferred to him other than
by registration of transfer,  pledge  or  release,
the  initial  transaction  statement  sent  to the
registered owner or registered  pledgee;  and  (c)
those  made  part of the security by reference, on
the  certificated  security  or  in  the   initial
transaction   statement,  to  another  instrument,
indenture  or  document  or  to  a   constitution,
statute, ordinance, rule, regulation, order or the
like to the extent that the terms referred  to  do
not   conflict   with  the  terms  stated  on  the
certificated  security   or   contained   in   the
statement.  A  reference under this paragraph does
not of itself charge a purchaser  for  value  with
notice  of  a  defect going to the validity of the
security, even though the certificated security or
statement expressly states that a person accepting
it admits notice.
    (2)  A certificated security in the hands of a
purchaser for value or an uncertificated  security
as  to  which an initial transaction statement has
been sent to a purchaser for value, other  than  a
security  issued  by  a government or governmental
agency or unit even though issued  with  a  defect
going  to  its  validity, is valid with respect to
the purchaser if  he  is  without  notice  of  the
particular  defect  unless  the  defect involves a
violation of constitutional provisions,  in  which
case  the  security  is  valid  with  respect to a
subsequent purchaser for value and without  notice
of  the  defect.  This  subsection  applies  to an
issuer that is a government or governmental agency
or  unit only if either there has been substantial
compliance with the legal  requirements  governing
the issue or the issuer has received a substantial
consideration for the issue as a whole or for  the
particular  security  and  a stated purpose of the
issue is one for which the  issuer  has  power  to
borrow money or issue the security.
    (3)  Except  as  provided by section 42a-8-205
in the case of  certain  unauthorized  signatures,
lack  of genuineness of a certificated security or
an initial transaction  statement  is  a  complete
defense,  even  against  a purchaser for value and
without notice.
    (4)  All  other  defenses  of  the issuer of a
certificated or uncertificated security, including
nondelivery   and   conditional   delivery   of  a
certificated security, are ineffective  against  a
purchaser  for  value who has taken without notice
of the particular defense.
    (5)   Nothing   in   this   section  shall  be
construed to affect the rights of  a  party  to  a
"when,  as  and if issued" or a "when distributed"
contract to cancel the contract in the event of  a
material  change  in the character of the security
that is the subject of the contract or in the plan
or  arrangement  pursuant to which the security is
to be issued or distributed.]
    (a)  EVEN  AGAINST  A  PURCHASER FOR VALUE AND
WITHOUT  NOTICE,  THE  TERMS  OF  A   CERTIFICATED
SECURITY  INCLUDE  TERMS STATED ON THE CERTIFICATE
AND TERMS MADE PART OF THE SECURITY  BY  REFERENCE
ON   THE   CERTIFICATE   TO   ANOTHER  INSTRUMENT,
INDENTURE  OR  DOCUMENT  OR  TO  A   CONSTITUTION,
STATUTE, ORDINANCE, RULE, REGULATION, ORDER OR THE
LIKE, TO THE EXTENT THE TERMS REFERRED TO  DO  NOT
CONFLICT  WITH  TERMS STATED ON THE CERTIFICATE. A
REFERENCE UNDER THIS SUBSECTION DOES NOT OF ITSELF
CHARGE  A  PURCHASER  FOR  VALUE  WITH NOTICE OF A
DEFECT GOING TO THE VALIDITY OF THE SECURITY, EVEN
IF  THE CERTIFICATE EXPRESSLY STATES THAT A PERSON
ACCEPTING  IT  ADMITS  NOTICE.  THE  TERMS  OF  AN
UNCERTIFICATED  SECURITY  INCLUDE  THOSE STATED IN
ANY INSTRUMENT, INDENTURE  OR  DOCUMENT  OR  IN  A
CONSTITUTION,     STATUTE,     ORDINANCE,    RULE,
REGULATION, ORDER OR THE LIKE, PURSUANT  TO  WHICH
THE SECURITY IS ISSUED.
    (b)  THE  FOLLOWING  RULES  APPLY IF AN ISSUER
ASSERTS THAT A SECURITY IS NOT VALID:
    (1)  A  SECURITY  OTHER  THAN  ONE ISSUED BY A
GOVERNMENT OR GOVERNMENTAL SUBDIVISION, AGENCY  OR
INSTRUMENTALITY,  EVEN THOUGH ISSUED WITH A DEFECT
GOING TO ITS VALIDITY, IS VALID IN THE HANDS OF  A
PURCHASER  FOR  VALUE  AND  WITHOUT  NOTICE OF THE
PARTICULAR DEFECT UNLESS  THE  DEFECT  INVOLVES  A
VIOLATION  OF  A CONSTITUTIONAL PROVISION. IN THAT
CASE, THE SECURITY IS VALID  IN  THE  HANDS  OF  A
PURCHASER  FOR  VALUE  AND  WITHOUT  NOTICE OF THE
DEFECT, OTHER  THAN  ONE  WHO  TAKES  BY  ORIGINAL
ISSUE.
    (2)   SUBDIVISION   (1)   OF  THIS  SUBSECTION
APPLIES TO AN  ISSUER  THAT  IS  A  GOVERNMENT  OR
GOVERNMENTAL      SUBDIVISION,      AGENCY      OR
INSTRUMENTALITY ONLY IF THERE HAS BEEN SUBSTANTIAL
COMPLIANCE  WITH  THE LEGAL REQUIREMENTS GOVERNING
THE ISSUE OR THE ISSUER HAS RECEIVED A SUBSTANTIAL
CONSIDERATION  FOR THE ISSUE AS A WHOLE OR FOR THE
PARTICULAR SECURITY AND A STATED  PURPOSE  OF  THE
ISSUE  IS  ONE  FOR  WHICH THE ISSUER HAS POWER TO
BORROW MONEY OR ISSUE THE SECURITY.
    (c)  EXCEPT  AS  OTHERWISE PROVIDED IN SECTION
42a-8-205, LACK OF GENUINENESS OF  A  CERTIFICATED
SECURITY  IS  A  COMPLETE  DEFENSE, EVEN AGAINST A
PURCHASER FOR VALUE AND WITHOUT NOTICE.
    (d)  ALL  OTHER  DEFENSES  OF  THE ISSUER OF A
SECURITY, INCLUDING  NONDELIVERY  AND  CONDITIONAL
DELIVERY   OF   A   CERTIFICATED   SECURITY,   ARE
INEFFECTIVE AGAINST A PURCHASER FOR VALUE WHO  HAS
TAKEN  THE CERTIFICATED SECURITY WITHOUT NOTICE OF
THE PARTICULAR DEFENSE.
    (e)  THIS SECTION DOES NOT AFFECT THE RIGHT OF
A PARTY TO CANCEL A CONTRACT FOR A SECURITY "WHEN,
AS  AND  IF  ISSUED"  OR "WHEN DISTRIBUTED" IN THE
EVENT OF A MATERIAL CHANGE IN THE CHARACTER OF THE
SECURITY THAT IS THE SUBJECT OF THE CONTRACT OR IN
THE PLAN OR  ARRANGEMENT  PURSUANT  TO  WHICH  THE
SECURITY IS TO BE ISSUED OR DISTRIBUTED.
    (f)  IF  A  SECURITY  IS  HELD BY A SECURITIES
INTERMEDIARY AGAINST WHOM  AN  ENTITLEMENT  HOLDER
HAS  A  SECURITY  ENTITLEMENT  WITH RESPECT TO THE
SECURITY, THE ISSUER MAY NOT  ASSERT  ANY  DEFENSE
THAT   THE   ISSUER   COULD   NOT  ASSERT  IF  THE
ENTITLEMENT HOLDER HELD THE SECURITY DIRECTLY.
    Sec.  19.  Section  42a-8-203  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  After  an  act or event creating a right
to  immediate   performance   of   the   principal
obligation  represented by a certificated security
or that sets a date on or after which the security
is  to  be presented or surrendered for redemption
or exchange, a purchaser is charged with notice of
any  defect  in its issue or defense of the issuer
if: (a) The act or  event  is  one  requiring  the
payment  of  money,  the  delivery of certificated
securities,  the  registration  of   transfer   of
uncertificated  securities  or  any  of  these  on
presentation  or  surrender  of  the  certificated
security, the funds or securities are available on
the date set for payment or exchange and he  takes
the  security  more than one year after that date;
and (b)  the  act  or  event  is  not  covered  by
paragraph  (a) and he takes the security more than
two years after the  date  set  for  surrender  or
presentation  or  the  date  on  which performance
became due.
    (2)  A  call  that  has  been  revoked  is not
within subsection (1).]
    AFTER  AN ACT OR EVENT, OTHER THAN A CALL THAT
HAS BEEN REVOKED, CREATING A  RIGHT  TO  IMMEDIATE
PERFORMANCE    OF    THE    PRINCIPAL   OBLIGATION
REPRESENTED BY A CERTIFICATED SECURITY OR  SETTING
A  DATE  ON  OR  AFTER WHICH THE SECURITY IS TO BE
PRESENTED  OR  SURRENDERED   FOR   REDEMPTION   OR
EXCHANGE,  A  PURCHASER  IS CHARGED WITH NOTICE OF
ANY DEFECT IN ITS ISSUE OR DEFENSE OF THE  ISSUER,
IF THE ACT OR EVENT:
    (1)   REQUIRES   THE  PAYMENT  OF  MONEY,  THE
DELIVERY   OF   A   CERTIFICATED   SECURITY,   THE
REGISTRATION  OF  TRANSFER  OF  AN  UNCERTIFICATED
SECURITY,  OR  ANY  OF  THEM  ON  PRESENTATION  OR
SURRENDER  OF  THE SECURITY CERTIFICATE, THE MONEY
OR SECURITY IS  AVAILABLE  ON  THE  DATE  SET  FOR
PAYMENT  OR  EXCHANGE, AND THE PURCHASER TAKES THE
SECURITY MORE THAN ONE YEAR AFTER THAT DATE; OR
    (2)  IS NOT COVERED BY SUBDIVISION (1) OF THIS
SECTION AND THE PURCHASER TAKES THE SECURITY  MORE
THAN TWO YEARS AFTER THE DATE SET FOR SURRENDER OR
PRESENTATION OR  THE  DATE  ON  WHICH  PERFORMANCE
BECAME DUE.
    Sec.  20.  Section  42a-8-204  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [A  restriction  on  transfer  of  a  security
imposed  by  the  issuer,  even  though  otherwise
lawful,  is ineffective against any person without
actual knowledge of it unless: (a) The security is
certificated   and   the   restriction   is  noted
conspicuously thereon;  or  (b)  the  security  is
uncertificated  and  a notation of the restriction
is contained in the initial transaction  statement
sent   to  the  person  or,  if  his  interest  is
transferred to him other than by  registration  of
transfer,   pledge   or   release,   the   initial
transaction statement sent to the registered owner
or the registered pledgee.]
    A   RESTRICTION  ON  TRANSFER  OF  A  SECURITY
IMPOSED BY THE ISSUER, EVEN IF  OTHERWISE  LAWFUL,
IS  INEFFECTIVE AGAINST A PERSON WITHOUT KNOWLEDGE
OF THE RESTRICTION UNLESS:
    (1)  THE  SECURITY  IS  CERTIFICATED  AND  THE
RESTRICTION IS NOTED CONSPICUOUSLY ON THE SECURITY
CERTIFICATE; OR
    (2)  THE  SECURITY  IS  UNCERTIFICATED AND THE
REGISTERED  OWNER  HAS  BEEN   NOTIFIED   OF   THE
RESTRICTION.
    Sec.  21.  Section  42a-8-205  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [An   unauthorized   signature   placed  on  a
certificated security prior to or in the course of
issue   or   placed   on  an  initial  transaction
statement is ineffective,  but  the  signature  is
effective in favor of a purchaser for value of the
certificated  security  to   whom   such   initial
transaction   statement  has  been  sent,  if  the
purchaser  is  without  notice  of  the  lack   of
authority and the signing has been done by: (a) An
authenticating trustee, registrar, transfer  agent
or  other  person entrusted by the issuer with the
signing of the security, of similar securities  or
of initial transaction statements or the immediate
preparation for signing of any of them; or (b)  an
employee   of   the  issuer,  or  of  any  of  the
foregoing, entrusted with responsible handling  of
the security or initial transaction statement.]
    AN   UNAUTHORIZED   SIGNATURE   PLACED   ON  A
SECURITY CERTIFICATE BEFORE OR IN  THE  COURSE  OF
ISSUE   IS   INEFFECTIVE,  BUT  THE  SIGNATURE  IS
EFFECTIVE IN FAVOR OF A PURCHASER FOR VALUE OF THE
CERTIFICATED  SECURITY IF THE PURCHASER IS WITHOUT
NOTICE OF THE LACK OF AUTHORITY  AND  THE  SIGNING
HAS BEEN DONE BY:
    (1)   AN  AUTHENTICATING  TRUSTEE,  REGISTRAR,
TRANSFER AGENT OR OTHER PERSON  ENTRUSTED  BY  THE
ISSUER   WITH   THE   SIGNING   OF   THE  SECURITY
CERTIFICATE OR OF SIMILAR  SECURITY  CERTIFICATES,
OR THE IMMEDIATE PREPARATION FOR SIGNING OF ANY OF
THEM; OR
    (2)  AN  EMPLOYEE  OF THE ISSUER, OR OF ANY OF
THE PERSONS LISTED  IN  SUBDIVISION  (1)  OF  THIS
SECTION,  ENTRUSTED  WITH  RESPONSIBLE HANDLING OF
THE SECURITY CERTIFICATE.
    Sec.  22.  Section  42a-8-206  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  If  a certificated security contains the
signatures necessary to its issue or transfer  but
is incomplete in any other respect: (a) Any person
may complete  it  by  filling  in  the  blanks  as
authorized;  and  (b)  even  though the blanks are
incorrectly filled in, the security  as  completed
is  enforceable  by  a  purchaser  who took it for
value and without notice of the incorrectness.
    (2)  A complete certificated security that has
been improperly altered, even though fraudulently,
remains  enforceable,  but  only  according to its
original terms.
    (3)   If   an  initial  transaction  statement
contains the signatures necessary to its validity,
but  is  incomplete  in any other respect: (a) Any
person may complete it by filling in the blanks as
authorized;  and  (b)  even  though the blanks are
incorrectly filled in, the statement as  completed
is  effective in favor of the person to whom it is
sent if he  purchased  the  security  referred  to
therein  for  value  and  without  notice  of  the
incorrectness.
    (4)  A  complete initial transaction statement
that has  been  improperly  altered,  even  though
fraudulently, is effective in favor of a purchaser
to whom it has been sent, but  only  according  to
its original terms.]
    (a)  IF  A  SECURITY  CERTIFICATE CONTAINS THE
SIGNATURES NECESSARY TO ITS ISSUE OR TRANSFER  BUT
IS INCOMPLETE IN ANY OTHER RESPECT:
    (1)  ANY  PERSON MAY COMPLETE IT BY FILLING IN
THE BLANKS AS AUTHORIZED; AND
    (2)  EVEN IF THE BLANKS ARE INCORRECTLY FILLED
IN,  THE  SECURITY  CERTIFICATE  AS  COMPLETED  IS
ENFORCEABLE  BY  A PURCHASER WHO TOOK IT FOR VALUE
AND WITHOUT NOTICE OF THE INCORRECTNESS.
    (b)  A  COMPLETE SECURITY CERTIFICATE THAT HAS
BEEN IMPROPERLY  ALTERED,  EVEN  IF  FRAUDULENTLY,
REMAINS  ENFORCEABLE,  BUT  ONLY  ACCORDING TO ITS
ORIGINAL TERMS.
    Sec.  23.  Section  42a-8-207  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)    Prior    to    due   presentment   for
registration  of  transfer   of   a   certificated
security   in   registered  form,  the  issuer  or
indenture trustee may treat the  registered  owner
as  the  person  exclusively  entitled to vote, to
receive notifications and  otherwise  to  exercise
all the rights and powers of an owner.
    (2)  Subject  to the provisions of subsections
(3), (4) and (6), the issuer or indenture  trustee
may    treat    the   registered   owner   of   an
uncertificated security as  a  person  exclusively
entitled  to  vote,  to receive notifications, and
otherwise to exercise all the rights and powers of
an owner.
    (3)  The registered owner of an uncertificated
security that is subject to a registered pledge is
not  entitled to registration of transfer prior to
the due presentment to the  issuer  of  a  release
instruction.  The  exercise  of  conversion rights
with  respect  to  a  convertible   uncertificated
security  is a transfer within the meaning of this
section.
    (4)   Upon   due  presentment  of  a  transfer
instruction from  the  registered  pledgee  of  an
uncertificated  security,  the  issuer  shall: (a)
Register the transfer of the security to  the  new
owner free of pledge, if the instruction specifies
a new owner, who may be  the  registered  pledgee,
and  does  not specify a pledgee; (b) register the
transfer of the security to the new owner  subject
to  the  interest  of the existing pledgee, if the
instruction specifies a new owner and the existing
pledgee;  or  (c)  register  the  release  of  the
security from the existing pledge and register the
pledge  of  the  security to the other pledgee, if
the instruction specifies the existing  owner  and
another pledgee.
    (5)  Continuity  of  perfection  of a security
interest is not broken by registration of transfer
under  paragraph  (b)  of  subsection  (4)  or  by
registration of release and pledge under paragraph
(c) of subsection (4), if the security interest is
assigned.
    (6)  If  an uncertificated security is subject
to a registered  pledge:  (a)  Any  uncertificated
securities  issued  in exchange for or distributed
with respect to  the  pledged  security  shall  be
registered   subject   to   the  pledge;  (b)  any
certificated securities issued in exchange for  or
distributed  with  respect to the pledged security
shall be delivered to the registered pledgee;  and
(c)   any   money  paid  in  exchange  for  or  in
redemption of part or all of the security shall be
paid to the registered pledgee.
    (7)   Nothing   in   this   article  shall  be
construed  to  affect   the   liability   of   the
registered   owner   of   a  security  for  calls,
assessments or the like.]
    (a)  BEFORE  DUE  PRESENTMENT FOR REGISTRATION
OF  TRANSFER  OF  A   CERTIFICATED   SECURITY   IN
REGISTERED  FORM  OR  OF AN INSTRUCTION REQUESTING
REGISTRATION  OF  TRANSFER  OF  AN  UNCERTIFICATED
SECURITY,  THE  ISSUER  OR  INDENTURE  TRUSTEE MAY
TREAT  THE  REGISTERED   OWNER   AS   THE   PERSON
EXCLUSIVELY     ENTITLED    TO    VOTE,    RECEIVE
NOTIFICATIONS  AND  OTHERWISE  EXERCISE  ALL   THE
RIGHTS AND POWERS OF AN OWNER.
    (b)   THIS   ARTICLE   DOES   NOT  AFFECT  THE
LIABILITY OF THE REGISTERED OWNER  OF  A  SECURITY
FOR A CALL, ASSESSMENT OR THE LIKE.
    Sec.  24.  Section  42a-8-208  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  A  person  placing  his signature upon a
certificated security or  an  initial  transaction
statement,  as  authenticating trustee, registrar,
transfer  agent  or  the  like,  warrants   to   a
purchaser  for  value of the certificated security
or a purchaser  for  value  of  an  uncertificated
security to whom the initial transaction statement
has been sent, if the purchaser is without  notice
of   the   particular   defect,   that:   (a)  The
certificated  security  or   initial   transaction
statement is genuine; (b) his own participation in
the issue or registration of the transfer,  pledge
or  release of the security is within his capacity
and within the scope of the authority received  by
him  from  the  issuer;  and (c) he has reasonable
grounds to believe that the  security  is  in  the
form   and   within   the  amount  the  issuer  is
authorized to issue.
    (2)  Unless  otherwise  agreed, a person by so
placing   his   signature    does    not    assume
responsibility for the validity of the security in
other respects.]
    (a)  A  PERSON  SIGNING A SECURITY CERTIFICATE
AS  AUTHENTICATING  TRUSTEE,  REGISTRAR,  TRANSFER
AGENT,  OR  THE  LIKE, WARRANTS TO A PURCHASER FOR
VALUE  OF  THE  CERTIFICATED  SECURITY,   IF   THE
PURCHASER IS WITHOUT NOTICE OF A PARTICULAR DEFECT
THAT:
    (1) THE CERTIFICATE IS GENUINE;
    (2)  THE  PERSON'S  OWN  PARTICIPATION  IN THE
ISSUE OF  THE  SECURITY  IS  WITHIN  THE  PERSON'S
CAPACITY  AND  WITHIN  THE  SCOPE OF THE AUTHORITY
RECEIVED BY THE PERSON FROM THE ISSUER; AND
    (3)  THE  PERSON  HAS  REASONABLE  GROUNDS  TO
BELIEVE THAT THE CERTIFICATED SECURITY IS  IN  THE
FORM   AND   WITHIN   THE  AMOUNT  THE  ISSUER  IS
AUTHORIZED TO ISSUE.
    (b)  UNLESS OTHERWISE AGREED, A PERSON SIGNING
UNDER SUBSECTION (a)  OF  THIS  SECTION  DOES  NOT
ASSUME  RESPONSIBILITY  FOR  THE  VALIDITY  OF THE
SECURITY IN OTHER RESPECTS.
    Sec.  25.  (NEW)  A lien in favor of an issuer
upon a certificated security is  valid  against  a
purchaser  only  if the right of the issuer to the
lien  is  noted  conspicuously  on  the   security
certificate.
    Sec.   26.   (NEW)   (a)   In   this  section,
"overissue"  means  the  issue  of  securities  in
excess  of  the  amount  the  issuer has corporate
power to issue, but an overissue does not occur if
appropriate action has cured the overissue.
    (b)    Except   as   otherwise   provided   in
subsections (c)  and  (d)  of  this  section,  the
provisions   of  this  article  which  validate  a
security or compel its issue  or  reissue  do  not
apply  to  the  extent  that validation, issue, or
reissue would result in overissue.
    (c)  If an identical security not constituting
an overissue is reasonably available for purchase,
a  person  entitled  to  issue  or  validation may
compel the issuer to  purchase  the  security  and
deliver   it   if  certificated  or  register  its
transfer if uncertificated, against  surrender  of
any security certificate the person holds.
    (d)  If a security is not reasonably available
for  purchase,  a  person  entitled  to  issue  or
validation  may  recover from the issuer the price
the person or the last purchaser  for  value  paid
for it with interest from the date of the person's
demand.
    Sec.  27.  Section  42a-8-301  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)   Upon   transfer  of  a  security  to  a
purchaser, as provided in section  42a-8-313,  the
purchaser  acquires  the  rights  in  the security
which his transferor had or had  actual  authority
to   convey  unless  the  purchaser's  rights  are
limited by subsection (4) of section 42a-8-302.
    (2)   A   transferee  of  a  limited  interest
acquires rights only to the extent of the interest
transferred. The creation or release of a security
interest in  a  security  is  the  transfer  of  a
limited interest in that security.]
    (a)  DELIVERY  OF A CERTIFICATED SECURITY TO A
PURCHASER OCCURS WHEN:
    (1)  THE  PURCHASER ACQUIRES POSSESSION OF THE
SECURITY CERTIFICATE;
    (2)  ANOTHER  PERSON,  OTHER THAN A SECURITIES
INTERMEDIARY, EITHER ACQUIRES  POSSESSION  OF  THE
SECURITY  CERTIFICATE  ON  BEHALF OF THE PURCHASER
OR, HAVING PREVIOUSLY ACQUIRED POSSESSION  OF  THE
CERTIFICATE,  ACKNOWLEDGES  THAT  IT HOLDS FOR THE
PURCHASER; OR
    (3)   A   SECURITIES  INTERMEDIARY  ACTING  ON
BEHALF OF THE PURCHASER ACQUIRES POSSESSION OF THE
SECURITY  CERTIFICATE,  ONLY IF THE CERTIFICATE IS
IN REGISTERED FORM AND HAS BEEN SPECIALLY ENDORSED
TO THE PURCHASER BY AN EFFECTIVE ENDORSEMENT.
    (b)  DELIVERY OF AN UNCERTIFICATED SECURITY TO
A PURCHASER OCCURS WHEN:
    (1)  THE ISSUER REGISTERS THE PURCHASER AS THE
REGISTERED   OWNER,   UPON   ORIGINAL   ISSUE   OR
REGISTRATION OF TRANSFER; OR
    (2)  ANOTHER  PERSON,  OTHER THAN A SECURITIES
INTERMEDIARY, EITHER BECOMES THE REGISTERED  OWNER
OF  THE  UNCERTIFICATED  SECURITY ON BEHALF OF THE
PURCHASER  OR,  HAVING   PREVIOUSLY   BECOME   THE
REGISTERED  OWNER,  ACKNOWLEDGES THAT IT HOLDS FOR
THE PURCHASER.
    Sec.  28.  Section  42a-8-302  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  A  "bona  fide purchaser" is a purchaser
for value in good faith and without notice of  any
adverse   claim:  (a)  Who  takes  delivery  of  a
certificated  security  in  bearer  form   or   in
registered  form,  issued or endorsed to him or in
blank; (b) to whom the transfer, pledge or release
of an uncertificated security is registered on the
books of the issuer; or (c) to whom a security  is
transferred under the provisions of paragraph (c),
(d)(i),  or  (g)  of  subsection  (1)  of  section
42a-8-313.
    (2)  "Adverse  claim"  includes a claim that a
transfer was  or  would  be  wrongful  or  that  a
particular  adverse  person is the owner of or has
an interest in the security.
    (3)  A  bona  fide  purchaser  in  addition to
acquiring the rights of a purchaser,  as  provided
in  section  42a-8-301, also acquires his interest
in the security free of any adverse claim.
    (4)  Notwithstanding subsection (1) of section
42a-8-301,  the   transferee   of   a   particular
certificated  security who has been a party to any
fraud or illegality affecting the security, or who
as  a  prior  holder of that certificated security
had notice of an adverse claim, cannot improve his
position by taking from a bona fide purchaser.]
    (a)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBSECTIONS (b) AND  (c)  OF  THIS  SECTION,  UPON
DELIVERY   OF  A  CERTIFICATED  OR  UNCERTIFICATED
SECURITY TO A PURCHASER,  THE  PURCHASER  ACQUIRES
ALL RIGHTS IN THE SECURITY THAT THE TRANSFEROR HAD
OR HAD POWER TO TRANSFER.
    (b)   A   PURCHASER   OF  A  LIMITED  INTEREST
ACQUIRES RIGHTS ONLY TO THE EXTENT OF THE INTEREST
PURCHASED.
    (c)  A  PURCHASER  OF  A CERTIFICATED SECURITY
WHO AS A PREVIOUS HOLDER HAD NOTICE OF AN  ADVERSE
CLAIM DOES NOT IMPROVE ITS POSITION BY TAKING FROM
A PROTECTED PURCHASER.
    Sec.  29.  Section  42a-8-303  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    ["Broker"  means  a  person engaged for all or
part of his time in the  business  of  buying  and
selling   securities,   who   in  the  transaction
concerned acts for, buys a security from, or sells
a security to, a customer. Nothing in this article
determines the capacity in which a person acts for
purposes of any other statute or rule to which the
person is subject.]
    (a)  "PROTECTED  PURCHASER"  MEANS A PURCHASER
OF A CERTIFICATED OR UNCERTIFICATED  SECURITY,  OR
OF AN INTEREST THEREIN, WHO:
    (1) GIVES VALUE;
    (2)  DOES NOT HAVE NOTICE OF ANY ADVERSE CLAIM
TO THE SECURITY; AND
    (3)  OBTAINS  CONTROL  OF  THE CERTIFICATED OR
UNCERTIFICATED SECURITY.
    (b)  IN  ADDITION TO ACQUIRING THE RIGHTS OF A
PURCHASER, A PROTECTED PURCHASER ALSO ACQUIRES ITS
INTEREST  IN  THE  SECURITY  FREE  OF  ANY ADVERSE
CLAIM.
    Sec.  30.  Section  42a-8-304  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  A  purchaser, including a broker for the
seller or buyer,  but  excluding  an  intermediary
bank,  of  a certificated security is charged with
notice of adverse claims  if:  (a)  The  security,
whether  in  bearer  or  registered form, has been
endorsed "for collection" or  "for  surrender"  or
for  some other purpose not involving transfer; or
(b) the security is in bearer form and has  on  it
an  unambiguous  statement that it is the property
of a person other than the  transferor.  The  mere
writing  of  a  name  on  a security is not such a
statement.
    (2)  A  purchaser,  including a broker for the
seller or buyer,  but  excluding  an  intermediary
bank,  to  whom the transfer, pledge or release of
an  uncertificated  security  is   registered   is
charged  with notice of adverse claims as to which
the issuer has a  duty  under  subsection  (4)  of
section 42a-8-403, at the time of registration and
which  are  noted  in  the   initial   transaction
statement   sent  to  the  purchaser  or,  if  his
interest is  transferred  to  him  other  than  by
registration  of transfer, pledge, or release, the
initial  transaction   statement   sent   to   the
registered owner or the registered pledgee.
    (3)  The  fact that the purchaser, including a
broker for the seller or buyer, of a  certificated
or  uncertificated  security,  has notice that the
security  is  held  for  a  third  person  or   is
registered  in  the  name  of  or  endorsed  by  a
fiduciary does not create a duty of  inquiry  into
the  rightfulness  of  the  transfer or constitute
constructive notice of adverse claims. However, if
the purchaser, excluding an intermediary bank, has
knowledge that the proceeds are being used or  the
transaction  is  for the individual benefit of the
fiduciary or otherwise  in  breach  of  duty,  the
purchaser   is  charged  with  notice  of  adverse
claims.]
    (a)   AN   ENDORSEMENT  MAY  BE  IN  BLANK  OR
SPECIAL.  AN  ENDORSEMENT  IN  BLANK  INCLUDES  AN
ENDORSEMENT   TO  BEARER.  A  SPECIAL  ENDORSEMENT
SPECIFIES TO WHOM A SECURITY IS TO BE  TRANSFERRED
OR  WHO  HAS  POWER  TO  TRANSFER IT. A HOLDER MAY
CONVERT  A  BLANK   ENDORSEMENT   TO   A   SPECIAL
ENDORSEMENT.
    (b)  AN  ENDORSEMENT  PURPORTING TO BE ONLY OF
PART OF A SECURITY CERTIFICATE REPRESENTING  UNITS
INTENDED   BY   THE   ISSUER   TO   BE  SEPARATELY
TRANSFERABLE IS EFFECTIVE TO  THE  EXTENT  OF  THE
ENDORSEMENT.
    (c)  AN  ENDORSEMENT,  WHETHER  SPECIAL  OR IN
BLANK,  DOES  NOT  CONSTITUTE  A  TRANSFER   UNTIL
DELIVERY  OF  THE  CERTIFICATE ON WHICH IT APPEARS
OR, IF THE ENDORSEMENT IS ON A SEPARATE  DOCUMENT,
UNTIL  DELIVERY  OF  BOTH  THE  DOCUMENT  AND  THE
CERTIFICATE.
    (d)  IF  A  SECURITY CERTIFICATE IN REGISTERED
FORM HAS BEEN DELIVERED TO A PURCHASER  WITHOUT  A
NECESSARY  ENDORSEMENT, THE PURCHASER MAY BECOME A
PROTECTED PURCHASER ONLY WHEN THE  ENDORSEMENT  IS
SUPPLIED.   HOWEVER,   AGAINST   A  TRANSFEROR,  A
TRANSFER  IS  COMPLETE  UPON  DELIVERY   AND   THE
PURCHASER  HAS A SPECIFICALLY ENFORCEABLE RIGHT TO
HAVE ANY NECESSARY ENDORSEMENT SUPPLIED.
    (e)  AN  ENDORSEMENT OF A SECURITY CERTIFICATE
IN BEARER FORM MAY GIVE NOTICE OF AN ADVERSE CLAIM
TO  THE  CERTIFICATE,  BUT  IT  DOES NOT OTHERWISE
AFFECT A RIGHT TO  REGISTRATION  THAT  THE  HOLDER
POSSESSES.
    (f)  UNLESS  OTHERWISE AGREED, A PERSON MAKING
AN  ENDORSEMENT  ASSUMES  ONLY   THE   OBLIGATIONS
PROVIDED  IN  SECTION  8  OF  THIS  ACT AND NOT AN
OBLIGATION THAT THE SECURITY WILL  BE  HONORED  BY
THE ISSUER.
    Sec.  31.  Section  42a-8-305  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [An  act  or  event  that  creates  a right to
immediate performance of the principal  obligation
represented  by  a certificated security or sets a
date on or after which a certificated security  is
to  be  presented or surrendered for redemption or
exchange does not itself constitute any notice  of
adverse  claims  except in the case of a transfer:
(a)  After  one  year  from  any  date   set   for
presentment   or   surrender   for  redemption  or
exchange; or (b) after six months  from  any  date
set  for  payment of money against presentation or
surrender of the security if funds  are  available
for payment on that date.]
    (a)  IF  AN INSTRUCTION HAS BEEN ORIGINATED BY
AN APPROPRIATE PERSON BUT  IS  INCOMPLETE  IN  ANY
OTHER  RESPECT,  ANY  PERSON  MAY  COMPLETE  IT AS
AUTHORIZED AND  THE  ISSUER  MAY  RELY  ON  IT  AS
COMPLETED,  EVEN  THOUGH  IT  HAS  BEEN  COMPLETED
INCORRECTLY.
    (b)   UNLESS   OTHERWISE   AGREED,   A  PERSON
INITIATING  AN  INSTRUCTION   ASSUMES   ONLY   THE
OBLIGATIONS  IMPOSED  BY SECTION 8 OF THIS ACT AND
NOT  AN  OBLIGATION  THAT  THE  SECURITY  WILL  BE
HONORED BY THE ISSUER.
    Sec.  32.  Section  42a-8-306  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  A  person  who  presents  a certificated
security  for  registration  of  transfer  or  for
payment or exchange warrants to the issuer that he
is  entitled  to  the  registration,  payment   or
exchange.  But,  a purchaser for value and without
notice of  adverse  claims  who  receives  a  new,
reissued  or reregistered certificated security on
registration of transfer or  receives  an  initial
transaction  statement confirming the registration
of  transfer  of  an   equivalent   uncertificated
security  to  him  warrants  only  that  he has no
knowledge  of  any  unauthorized  signature  in  a
necessary endorsement.
    (2)  A  person  by transferring a certificated
security to a purchaser for  value  warrants  only
that:  (a) His transfer is effective and rightful;
(b) the security  is  genuine  and  has  not  been
materially  altered;  and  (c) he knows of no fact
which might impair the validity of the security.
    (3)  If  a  certificated security is delivered
by an intermediary  known  to  be  entrusted  with
delivery  of  the security on behalf of another or
with collection of a draft or other claim  against
delivery,  the  intermediary  by delivery warrants
only his own good faith and authority, even though
he  has  purchased  or  made  advances against the
claim to be collected against the delivery.
    (4)  A  pledgee  or  other holder for security
who redelivers a certificated  security  received,
or  after  payment  and  on  order  of  the debtor
delivers that security to a  third  person,  makes
only  the  warranties  of  an  intermediary  under
subsection (3).
    (5)  A  person  who  originates an instruction
warrants  to  the  issuer  that:  (a)  He  is   an
appropriate  person  to originate the instruction;
and (b) at the time the instruction  is  presented
to   the   issuer  he  will  be  entitled  to  the
registration of transfer, pledge or release.
    (6)  A  person  who  originates an instruction
warrants to any person specially guaranteeing  his
signature that: (a) He is an appropriate person to
originate the instruction; and (b) at the time the
instruction is presented to the issuer (i) he will
be  entitled  to  the  registration  of  transfer,
pledge  or  release; and (ii) the transfer, pledge
or release requested in the  instruction  will  be
registered  by  the  issuer  free  from all liens,
security interests, restrictions and claims  other
than those specified in the instruction.
    (7)  A  person  who  originates an instruction
warrants to a  purchaser  for  value  and  to  any
person  guaranteeing  the instruction that: (a) He
is  an  appropriate  person   to   originate   the
instruction;   (b)   the  uncertificated  security
referred to therein is valid; and (c) at the  time
the instruction is presented to the issuer (i) the
transferor will be entitled to the registration of
transfer,  pledge  or  release; (ii) the transfer,
pledge or release  requested  in  the  instruction
will  be  registered  by  the issuer free from all
liens, security interests, restrictions and claims
other than those specified in the instruction; and
(iii) the requested transfer,  pledge  or  release
will be rightful.
    (8)  If  a  secured  party  is  the registered
pledgee   or   the   registered   owner   of    an
uncertificated  security,  a person who originates
an instruction  of  release  or  transfer  to  the
debtor  or,  after  payment  and  on  order of the
debtor, a transfer instruction to a third  person,
warrants  to  the  debtor or the third person only
that he is an appropriate person to originate  the
instruction  and  at  the  time the instruction is
presented to the issuer, the  transferor  will  be
entitled   to   the  registration  of  release  or
transfer. If a transfer  instruction  to  a  third
person  who is a purchaser for value is originated
on order of the debtor, the debtor  makes  to  the
purchaser   the   warranties  of  paragraphs  (b),
(c)(ii) and (c)(iii) of  subsection  (7)  of  this
section.
    (9)  A  person who transfers an uncertificated
security to a purchaser for  value  and  does  not
originate  an  instruction  in connection with the
transfer warrants only that: (a) His  transfer  is
effective and rightful; and (b) the uncertificated
security is valid.
    (10)  A  broker  gives  to his customer and to
the  issuer  and  a   purchaser   the   applicable
warranties  provided  in  this section and has the
rights and privileges of a  purchaser  under  this
section.  The  warranties  of  and in favor of the
broker acting as  an  agent  are  in  addition  to
applicable warranties given by and in favor of his
customer.]
    (a)  A PERSON WHO GUARANTEES A SIGNATURE OF AN
ENDORSER OF A SECURITY CERTIFICATE  WARRANTS  THAT
AT THE TIME OF SIGNING:
    (1) THE SIGNATURE WAS GENUINE;
    (2)  THE  SIGNER  WAS AN APPROPRIATE PERSON TO
ENDORSE, OR IF THE SIGNATURE IS BY AN  AGENT,  THE
AGENT HAD ACTUAL AUTHORITY TO ACT ON BEHALF OF THE
APPROPRIATE PERSON; AND
    (3) THE SIGNER HAD LEGAL CAPACITY TO SIGN.
    (b)  A  PERSON  WHO  GUARANTEES A SIGNATURE OF
THE ORIGINATOR OF AN INSTRUCTION WARRANTS THAT  AT
THE TIME OF SIGNING:
    (1) THE SIGNATURE WAS GENUINE;
    (2)  THE  SIGNER  WAS AN APPROPRIATE PERSON TO
ORIGINATE THE INSTRUCTION, OR IF THE SIGNATURE  IS
BY AN AGENT, THE AGENT HAD ACTUAL AUTHORITY TO ACT
ON BEHALF OF THE APPROPRIATE PERSON, IF THE PERSON
SPECIFIED  IN  THE  INSTRUCTION  AS THE REGISTERED
OWNER WAS, IN FACT, THE REGISTERED  OWNER,  AS  TO
WHICH FACT THE SIGNATURE GUARANTOR DOES NOT MAKE A
WARRANTY; AND
    (3) THE SIGNER HAD LEGAL CAPACITY TO SIGN.
    (c)  A  PERSON  WHO  SPECIALLY  GUARANTEES THE
SIGNATURE OF AN ORIGINATOR OF AN INSTRUCTION MAKES
THE  WARRANTIES  OF  A  SIGNATURE  GUARANTOR UNDER
SUBSECTION (b) OF THIS SECTION AND  ALSO  WARRANTS
THAT  AT  THE TIME THE INSTRUCTION IS PRESENTED TO
THE ISSUER:
    (1)  THE  PERSON  SPECIFIED IN THE INSTRUCTION
AS THE  REGISTERED  OWNER  OF  THE  UNCERTIFICATED
SECURITY WILL BE THE REGISTERED OWNER; AND
    (2)   THE   TRANSFER   OF  THE  UNCERTIFICATED
SECURITY REQUESTED  IN  THE  INSTRUCTION  WILL  BE
REGISTERED  BY  THE  ISSUER  FREE  FROM ALL LIENS,
SECURITY INTERESTS, RESTRICTIONS AND CLAIMS  OTHER
THAN THOSE SPECIFIED IN THE INSTRUCTION.
    (d)  A GUARANTOR UNDER SUBSECTIONS (a) AND (b)
OF THIS  SECTION  OR  A  SPECIAL  GUARANTOR  UNDER
SUBSECTION  (c) OF THIS SECTION DOES NOT OTHERWISE
WARRANT THE RIGHTFULNESS OF THE TRANSFER.
    (e)  A PERSON WHO GUARANTEES AN ENDORSEMENT OF
A SECURITY CERTIFICATE MAKES THE WARRANTIES  OF  A
SIGNATURE  GUARANTOR  UNDER SUBSECTION (a) OF THIS
SECTION AND ALSO WARRANTS THE RIGHTFULNESS OF  THE
TRANSFER IN ALL RESPECTS.
    (f)  A  PERSON  WHO  GUARANTEES AN INSTRUCTION
REQUESTING  THE  TRANSFER  OF  AN   UNCERTIFICATED
SECURITY   MAKES   THE  WARRANTIES  OF  A  SPECIAL
SIGNATURE GUARANTOR UNDER SUBSECTION (c)  OF  THIS
SECTION  AND ALSO WARRANTS THE RIGHTFULNESS OF THE
TRANSFER IN ALL RESPECTS.
    (g)  AN  ISSUER  MAY  NOT  REQUIRE  A  SPECIAL
GUARANTY OF SIGNATURE, A GUARANTY OF  ENDORSEMENT,
OR  A  GUARANTY  OF  INSTRUCTION AS A CONDITION TO
REGISTRATION OF TRANSFER.
    (h)  THE  WARRANTIES  UNDER  THIS  SECTION ARE
MADE TO  A  PERSON  TAKING  OR  DEALING  WITH  THE
SECURITY  IN  RELIANCE  ON  THE  GUARANTY, AND THE
GUARANTOR  IS  LIABLE  TO  THE  PERSON  FOR   LOSS
RESULTING   FROM  THEIR  BREACH.  AN  ENDORSER  OR
ORIGINATOR  OF  AN  INSTRUCTION  WHOSE  SIGNATURE,
ENDORSEMENT  OR INSTRUCTION HAS BEEN GUARANTEED IS
LIABLE TO A GUARANTOR FOR ANY LOSS SUFFERED BY THE
GUARANTOR  AS A RESULT OF BREACH OF THE WARRANTIES
OF THE GUARANTOR.
    Sec.  33.  Section  42a-8-307  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [If  a  certificated  security  in  registered
form has been delivered to a purchaser  without  a
necessary  endorsement  he  may become a bona fide
purchaser only as of the time the  endorsement  is
supplied; but against the transferor, the transfer
is complete upon delivery and the purchaser has  a
specifically   enforceable   right   to  have  any
necessary endorsement supplied.]
    UNLESS  OTHERWISE  AGREED, THE TRANSFEROR OF A
SECURITY ON DUE DEMAND SHALL SUPPLY THE  PURCHASER
WITH  PROOF  OF  AUTHORITY TO TRANSFER OR WITH ANY
OTHER REQUISITE NECESSARY TO  OBTAIN  REGISTRATION
OF  THE  TRANSFER  OF  THE  SECURITY,  BUT  IF THE
TRANSFER IS NOT FOR VALUE, A TRANSFEROR  NEED  NOT
COMPLY  UNLESS  THE  PURCHASER  PAYS THE NECESSARY
EXPENSES.  IF  THE  TRANSFEROR  FAILS   WITHIN   A
REASONABLE  TIME  TO  COMPLY  WITH THE DEMAND, THE
PURCHASER MAY REJECT OR RESCIND THE TRANSFER.
    Sec.  34.  Section  42a-8-401  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  If a certificated security in registered
form is presented to the issuer with a request  to
register  transfer  or an instruction is presented
to the issuer with a request to register transfer,
pledge  or  release, the issuer shall register the
transfer, pledge or release as requested  if:  (a)
The  security  is  endorsed or the instruction was
originated by the appropriate person or persons as
provided  by  section  42a-8-308;  (b)  reasonable
assurance  is  given  as   provided   by   section
42a-8-402  that those endorsements are genuine and
effective; (c)  the  issuer  has  no  duty  as  to
adverse  claims  or  has  discharged  the  duty as
provided by section 42a-8-403; (d) any  applicable
law  relating  to the collection of taxes has been
complied with; and (e) the  transfer  is  in  fact
rightful or is to a bona fide purchaser.
    (2)  If  an issuer is under a duty to register
a transfer, pledge or release of a  security,  the
issuer  is  also liable to the person presenting a
certificated  security  or  an   instruction   for
registration  or  his principal for loss resulting
from any unreasonable  delay  in  registration  or
from  failure or refusal to register the transfer,
pledge or release.]
    (a)  IF  A CERTIFICATED SECURITY IN REGISTERED
FORM IS PRESENTED TO AN ISSUER WITH A  REQUEST  TO
REGISTER  TRANSFER  OR AN INSTRUCTION IS PRESENTED
TO AN ISSUER WITH A REQUEST TO  REGISTER  TRANSFER
OF  AN  UNCERTIFICATED  SECURITY, THE ISSUER SHALL
REGISTER THE TRANSFER AS REQUESTED IF:
    (1)  UNDER  THE  TERMS  OF  THE  SECURITY  THE
PERSON  SEEKING  REGISTRATION   OF   TRANSFER   IS
ELIGIBLE  TO  HAVE  THE SECURITY REGISTERED IN ITS
NAME;
    (2)  THE ENDORSEMENT OR INSTRUCTION IS MADE BY
THE APPROPRIATE PERSON OR  BY  AN  AGENT  WHO  HAS
ACTUAL   AUTHORITY   TO   ACT  ON  BEHALF  OF  THE
APPROPRIATE PERSON;
    (3)  REASONABLE  ASSURANCE  IS  GIVEN THAT THE
ENDORSEMENT  OR   INSTRUCTION   IS   GENUINE   AND
AUTHORIZED (SECTION 42a-8-402);
    (4)   ANY   APPLICABLE  LAW  RELATING  TO  THE
COLLECTION OF TAXES HAS BEEN COMPLIED WITH;
    (5)   THE   TRANSFER   DOES  NOT  VIOLATE  ANY
RESTRICTION ON TRANSFER IMPOSED BY THE  ISSUER  IN
ACCORDANCE WITH SECTION 42a-8-204;
    (6)  A  DEMAND  THAT  THE  ISSUER NOT REGISTER
TRANSFER HAS NOT BECOME  EFFECTIVE  UNDER  SECTION
42a-8-403,   OR   THE  ISSUER  HAS  COMPLIED  WITH
SUBSECTION (b) OF SECTION 42a-8-403 BUT  NO  LEGAL
PROCESS  OR INDEMNITY BOND IS OBTAINED AS PROVIDED
IN SUBSECTION (d) OF SECTION 42a-8-403; AND
    (7)  THE TRANSFER IS IN FACT RIGHTFUL OR IS TO
A PROTECTED PURCHASER.
    (b)  IF  AN ISSUER IS UNDER A DUTY TO REGISTER
A TRANSFER OF A SECURITY, THE ISSUER IS LIABLE  TO
A  PERSON PRESENTING A CERTIFICATED SECURITY OR AN
INSTRUCTION FOR REGISTRATION OR  TO  THE  PERSON'S
PRINCIPAL  FOR  LOSS  RESULTING  FROM UNREASONABLE
DELAY IN REGISTRATION OR  FAILURE  OR  REFUSAL  TO
REGISTER THE TRANSFER.
    Sec.  35.  Section  42a-8-402  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  The  issuer  may  require  the following
assurance that each  necessary  endorsement  of  a
certificated  security  or  each  instruction,  as
provided for in section 42a-8-308, is genuine  and
effective:  (a)  In  all cases, a guarantee of the
signature, as provided for in  subsection  (1)  or
(2)  of section 42a-8-312, of the person endorsing
a  certificated   security   or   originating   an
instruction   including,   in   the   case  of  an
instruction,   a   warranty   of   the    taxpayer
identification  number or, in the absence thereof,
other reasonable assurance of identity; (b) if the
endorsement   is   made   or  the  instruction  is
originated by an agent, appropriate  assurance  of
authority  to sign; (c) if the endorsement is made
or the instruction is originated by  a  fiduciary,
appropriate evidence of appointment or incumbency;
(d)  if  there  is  more   than   one   fiduciary,
reasonable  assurance that all who are required to
sign have done so; and (e) if the  endorsement  is
made  or the instruction is originated by a person
not covered by any  of  the  foregoing,  assurance
appropriate to the case corresponding as nearly as
may be to the foregoing.
    (2)   A   "guarantee   of  the  signature"  in
subsection (1) means a guarantee signed by  or  on
behalf  of  a  person  reasonably  believed by the
issuer to be responsible.  The  issuer  may  adopt
standards  with  respect to responsibility if they
are not manifestly unreasonable.
    (3)  "Appropriate  evidence  of appointment or
incumbency" in subsection (1) means:  (a)  In  the
case  of  fiduciary  appointed  or  qualified by a
court,  a  certificate  issued  by  or  under  the
direction  or  supervision  of  that  court  or an
officer thereof and dated within sixty days before
the  date  of presentation for transfer, pledge or
release; or (b) in any other case,  a  copy  of  a
document  showing the appointment or a certificate
issued by or on  behalf  of  a  person  reasonably
believed  by  the  issuer to be responsible or, in
the absence of that document or certificate, other
evidence  reasonably  deemed  by  the issuer to be
appropriate. The issuer may adopt  standards  with
respect to the evidence if they are not manifestly
unreasonable.  The  issuer  is  not  charged  with
notice  of  the  contents of any document obtained
pursuant to  this  paragraph  (b)  except  to  the
extent  that  the  contents relate directly to the
appointment or incumbency.
    (4)   The   issuer   may   elect   to  require
reasonable assurance beyond that specified in this
section,  but  if  it  does  so and, for a purpose
other than that specified in  subdivision  (b)  of
subsection  (3) of this section, both requires and
obtains  a  copy  of  a  will,  trust,  indenture,
articles   of   copartnership,   bylaws  or  other
controlling instrument, it is charged with  notice
of  all  matters  contained  therein affecting the
transfer, pledge or release.]
    (a)   AN  ISSUER  MAY  REQUIRE  THE  FOLLOWING
ASSURANCE THAT EACH NECESSARY ENDORSEMENT OR  EACH
INSTRUCTION IS GENUINE AND AUTHORIZED:
    (1)  IN ALL CASES, A GUARANTY OF THE SIGNATURE
OF THE PERSON MAKING AN ENDORSEMENT OR ORIGINATING
AN  INSTRUCTION  INCLUDING,  IN  THE  CASE  OF  AN
INSTRUCTION, REASONABLE ASSURANCE OF IDENTITY;
    (2)   IF   THE  ENDORSEMENT  IS  MADE  OR  THE
INSTRUCTION IS ORIGINATED BY AN AGENT, APPROPRIATE
ASSURANCE OF ACTUAL AUTHORITY TO SIGN;
    (3)   IF   THE  ENDORSEMENT  IS  MADE  OR  THE
INSTRUCTION IS ORIGINATED BY A FIDUCIARY  PURSUANT
TO  SUBDIVISION  (4)  OR  (5) OF SUBSECTION (a) OF
SECTION   42a-8-107,   APPROPRIATE   EVIDENCE   OF
APPOINTMENT OR INCUMBENCY;
    (4)  IF  THERE  IS  MORE  THAN  ONE FIDUCIARY,
REASONABLE ASSURANCE THAT ALL WHO ARE REQUIRED  TO
SIGN HAVE DONE SO; AND
    (5)   IF   THE  ENDORSEMENT  IS  MADE  OR  THE
INSTRUCTION IS ORIGINATED BY A PERSON NOT  COVERED
BY ANOTHER PROVISION OF THIS SUBSECTION, ASSURANCE
APPROPRIATE TO THE CASE CORRESPONDING AS NEARLY AS
MAY BE TO THE PROVISIONS OF THIS SUBSECTION.
    (b)  AN ISSUER MAY ELECT TO REQUIRE REASONABLE
ASSURANCE BEYOND THAT SPECIFIED IN THIS SECTION.
    (c) IN THIS SECTION:
    (1)   "GUARANTY  OF  THE  SIGNATURE"  MEANS  A
GUARANTY SIGNED  BY  OR  ON  BEHALF  OF  A  PERSON
REASONABLY   BELIEVED   BY   THE   ISSUER   TO  BE
RESPONSIBLE. AN ISSUER MAY  ADOPT  STANDARDS  WITH
RESPECT   TO   RESPONSIBILITY   IF  THEY  ARE  NOT
MANIFESTLY UNREASONABLE.
    (2)  "APPROPRIATE  EVIDENCE  OF APPOINTMENT OR
INCUMBENCY" MEANS:
    (i)  IN  THE  CASE OF A FIDUCIARY APPOINTED OR
QUALIFIED BY A COURT, A CERTIFICATE ISSUED  BY  OR
UNDER THE DIRECTION OR SUPERVISION OF THE COURT OR
AN OFFICER THEREOF AND  DATED  WITHIN  SIXTY  DAYS
BEFORE THE DATE OF PRESENTATION FOR TRANSFER; OR
    (ii)  IN  ANY OTHER CASE, A COPY OF A DOCUMENT
SHOWING THE APPOINTMENT OR A CERTIFICATE ISSUED BY
OR ON BEHALF OF A PERSON REASONABLY BELIEVED BY AN
ISSUER TO BE RESPONSIBLE OR,  IN  THE  ABSENCE  OF
THAT  DOCUMENT  OR CERTIFICATE, OTHER EVIDENCE THE
ISSUER REASONABLY CONSIDERS APPROPRIATE.
    Sec.  36.  Section  42a-8-403  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)   An   issuer   to  whom  a  certificated
security  is  presented  for  registration   shall
inquire  into  adverse  claims  if:  (a) A written
notification of an adverse claim is received at  a
time  and  in  a  manner  affording  the  issuer a
reasonable opportunity to act on it prior  to  the
issuance   of  a  new,  reissued  or  reregistered
certificated  security,   and   the   notification
identifies  the claimant, the registered owner and
the issue of which the security  is  a  part,  and
provides an address for communications directed to
the claimant; or (b) the issuer  is  charged  with
notice  of  an  adverse  claim  from a controlling
instrument  it  has  elected  to   require   under
subsection (4) of section 42a-8-402.
    (2)  The  issuer  may  discharge  any  duty of
inquiry  by  any   reasonable   means,   including
notifying  an  adverse claimant by registered mail
or by certified mail receipted for on  mailing  at
the  address  furnished  by him or, if there be no
such address, at his residence or regular place of
business  that  the certificated security has been
presented for registration of transfer by a  named
person,  and  that the transfer will be registered
unless within thirty days from the date of mailing
the   notification,  either:  (a)  An  appropriate
restraining order,  injunction  or  other  process
issues  from a court of competent jurisdiction; or
(b) there is filed with the  issuer  an  indemnity
bond,  sufficient  in  the  issuer's  judgment  to
protect  the  issuer  and  any   transfer   agent,
registrar  or  other  agent of the issuer involved
from any loss it or they may suffer  by  complying
with the adverse claim.
    (3)  Unless  an  issuer is charged with notice
of an adverse claim from a controlling  instrument
which  it  has elected to require under subsection
(4) of section 42a-8-402 or receives  notification
of  an  adverse claim under subsection (1) of this
section, if a certificated security presented  for
registration is endorsed by the appropriate person
or persons the issuer is under no duty to  inquire
into  adverse claims. In particular: (a) An issuer
registering a certificated security in the name of
a person who is a fiduciary or who is described as
a fiduciary is  not  bound  to  inquire  into  the
existence,  extent,  or correct description of the
fiduciary relationship; and thereafter the  issuer
may   assume   without   inquiry  that  the  newly
registered owner continues  to  be  the  fiduciary
until  the issuer receives written notice that the
fiduciary is no longer acting as such with respect
to   the   particular   security;  (b)  an  issuer
registering  transfer  on  an  endorsement  by   a
fiduciary  is  not  bound  to  inquire whether the
transfer is made in compliance with a  controlling
instrument  or  with  the  law of the state having
jurisdiction  of   the   fiduciary   relationship,
including  any  law  requiring  the  fiduciary  to
obtain court approval of the transfer; and (c) the
issuer  is not charged with notice of the contents
of any court record or file or other  recorded  or
unrecorded document even though the document is in
its possession and even  though  the  transfer  is
made  on  the  endorsement  of  a fiduciary to the
fiduciary himself or to his nominee.
    (4)  An  issuer is under no duty as to adverse
claims with respect to an uncertificated  security
except:  (a)  Claims  embodied  in  a  restraining
order, injunction or other  legal  process  served
upon  the  issuer  if  the process was served at a
time and  in  a  manner  affording  the  issuer  a
reasonable  opportunity to act on it in accordance
with  the  requirements  of  subsection  (5);  (b)
claims  of which the issuer has received a written
notification from  the  registered  owner  or  the
registered   pledgee   if   the  notification  was
received at a time and in a manner  affording  the
issuer  a  reasonable  opportunity to act on it in
accordance with  the  requirements  of  subsection
(5);   (c)   claims,   including  restrictions  on
transfer not imposed by the issuer, to  which  the
registration of transfer to the present registered
owner was subject and were so noted in the initial
transaction  statement sent to him; and (d) claims
as to which an issuer is charged with notice  from
a controlling instrument it has elected to require
under subsection (4) of section 42a-8-402.
    (5)   If   the  issuer  of  an  uncertificated
security is under a duty as to an  adverse  claim,
he  discharges  that  duty  by:  (a)  Including  a
notation of the claim in any statements sent  with
respect to the security under subsections (3), (6)
and (7) of section 42a-8-408; and (b) refusing  to
register  the  transfer  or pledge of the security
unless the nature of the claim does  not  preclude
transfer or pledge subject thereto.
    (6)  If the transfer or pledge of the security
is registered  subject  to  an  adverse  claim,  a
notation  of  the  claim  must  be included in the
initial transaction statement and  all  subsequent
statements  sent  to  the  transferee  and pledgee
under section 42a-8-408.
    (7)  Notwithstanding  subsections (4) and (5),
if an uncertificated security  was  subject  to  a
registered  pledge  at  the  time the issuer first
came under a  duty  as  to  a  particular  adverse
claim,  the issuer has no duty as to that claim if
transfer of  the  security  is  requested  by  the
registered pledgee or an appropriate person acting
for the registered pledgee unless: (a)  The  claim
was  embodied  in  legal  process  which expressly
provides otherwise; (b) the claim was asserted  in
a   written   notification   from  the  registered
pledgee; (c) the claim was one  as  to  which  the
issuer  was charged with notice from a controlling
instrument it required  under  subsection  (4)  of
section 42a-8-402 in connection with the pledgee's
request  for  transfer;  or   (d)   the   transfer
requested is to the registered owner.]
    (a)  A  PERSON WHO IS AN APPROPRIATE PERSON TO
MAKE AN ENDORSEMENT OR  ORIGINATE  AN  INSTRUCTION
MAY  DEMAND  THAT THE ISSUER NOT REGISTER TRANSFER
OF A SECURITY BY COMMUNICATING  TO  THE  ISSUER  A
NOTIFICATION  THAT IDENTIFIES THE REGISTERED OWNER
AND THE ISSUE OF WHICH THE SECURITY IS A PART  AND
PROVIDES AN ADDRESS FOR COMMUNICATIONS DIRECTED TO
THE  PERSON  MAKING  THE  DEMAND.  THE  DEMAND  IS
EFFECTIVE  ONLY IF IT IS RECEIVED BY THE ISSUER AT
A TIME  AND  IN  A  MANNER  AFFORDING  THE  ISSUER
REASONABLE OPPORTUNITY TO ACT ON IT.
    (b)  IF  A CERTIFICATED SECURITY IN REGISTERED
FORM IS PRESENTED TO AN ISSUER WITH A  REQUEST  TO
REGISTER  TRANSFER  OR AN INSTRUCTION IS PRESENTED
TO AN ISSUER WITH A REQUEST TO  REGISTER  TRANSFER
OF  AN  UNCERTIFICATED  SECURITY AFTER DEMAND THAT
THE ISSUER NOT  REGISTER  A  TRANSFER  HAS  BECOME
EFFECTIVE,  THE  ISSUER SHALL PROMPTLY COMMUNICATE
TO THE PERSON WHO  INITIATED  THE  DEMAND  AT  THE
ADDRESS  PROVIDED IN THE DEMAND AND THE PERSON WHO
PRESENTED  THE  SECURITY   FOR   REGISTRATION   OF
TRANSFER  OR  INITIATED THE INSTRUCTION REQUESTING
REGISTRATION OF TRANSFER  A  NOTIFICATION  STATING
THAT:
    (1)   THE   CERTIFICATED   SECURITY  HAS  BEEN
PRESENTED FOR  REGISTRATION  OF  TRANSFER  OR  THE
INSTRUCTION  FOR  REGISTRATION  OF TRANSFER OF THE
UNCERTIFICATED SECURITY HAS BEEN RECEIVED;
    (2)  A  DEMAND  THAT  THE  ISSUER NOT REGISTER
TRANSFER HAD PREVIOUSLY BEEN RECEIVED; AND
    (3)  THE  ISSUER WILL WITHHOLD REGISTRATION OF
TRANSFER FOR  A  PERIOD  OF  TIME  STATED  IN  THE
NOTIFICATION  IN  ORDER  TO PROVIDE THE PERSON WHO
INITIATED THE  DEMAND  AN  OPPORTUNITY  TO  OBTAIN
LEGAL PROCESS OR AN INDEMNITY BOND.
    (c)  THE  PERIOD  DESCRIBED IN SUBDIVISION (3)
OF SUBSECTION (b) OF THIS SECTION MAY  NOT  EXCEED
THIRTY DAYS AFTER THE DATE OF COMMUNICATION OF THE
NOTIFICATION. A SHORTER PERIOD MAY BE SPECIFIED BY
THE ISSUER IF IT IS NOT MANIFESTLY UNREASONABLE.
    (d)  AN  ISSUER  IS NOT LIABLE TO A PERSON WHO
INITIATED A DEMAND THAT THE  ISSUER  NOT  REGISTER
TRANSFER  FOR  ANY  LOSS  THE  PERSON SUFFERS AS A
RESULT OF REGISTRATION OF A TRANSFER  PURSUANT  TO
AN  EFFECTIVE  ENDORSEMENT  OR  INSTRUCTION IF THE
PERSON WHO INITIATED THE DEMAND DOES  NOT,  WITHIN
THE  TIME  STATED  IN  THE ISSUER'S COMMUNICATION,
EITHER:
    (1)  OBTAIN  AN APPROPRIATE RESTRAINING ORDER,
INJUNCTION  OR  OTHER  PROCESS  FROM  A  COURT  OF
COMPETENT  JURISDICTION  ENJOINING THE ISSUER FROM
REGISTERING THE TRANSFER; OR
    (2)  FILE  WITH  THE ISSUER AN INDEMNITY BOND,
SUFFICIENT IN THE ISSUER'S JUDGMENT TO PROTECT THE
ISSUER  AND ANY TRANSFER AGENT, REGISTRAR OR OTHER
AGENT OF THE ISSUER INVOLVED FROM ANY LOSS  IT  OR
THEY  MAY  SUFFER  BY  REFUSING  TO  REGISTER  THE
TRANSFER.
    (e)  THIS  SECTION  DOES NOT RELIEVE AN ISSUER
FROM LIABILITY FOR REGISTERING  TRANSFER  PURSUANT
TO  AN  ENDORSEMENT  OR  INSTRUCTION  THAT WAS NOT
EFFECTIVE.
    Sec.  37.  Section  42a-8-404  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  Except  as  provided in any law relating
to the collection of  taxes,  the  issuer  is  not
liable  to  the owner, pledgee or any other person
suffering loss as a result of the registration  of
a  transfer,  pledge  or release of a security if:
(a) There were on or with a certificated  security
the  necessary  endorsements  or  the  issuer  had
received   an   instruction   originated   by   an
appropriate   person   as   provided   by  section
42a-8-308; and (b) the issuer had no  duty  as  to
adverse  claims  or  has  discharged  the  duty as
provided by section 42a-8-403.
    (2)  If an issuer has registered a transfer of
a certificated security to a person  not  entitled
to  it,  the issuer on demand shall deliver a like
security  to  the  true  owner  unless:  (a)   The
registration  was  pursuant to subsection (1); (b)
the owner is precluded from  asserting  any  claim
for  registering the transfer under subsection (1)
of section 42a-8-405; or (c)  the  delivery  would
result  in  overissue,  in which case the issuer's
liability is governed by section 42a-8-104.
    (3)  If  an issuer has improperly registered a
transfer, pledge or release of  an  uncertificated
security,  the  issuer  on demand from the injured
party shall restore the records as to the  injured
party to the condition that would have obtained if
the  improper  registration  had  not  been   made
unless:  (a)  The  registration  was  pursuant  to
subsection (1);  or  (b)  the  registration  would
result  in  overissue,  in which case the issuer's
liability is governed by section 42a-8-104.]
    (a)  EXCEPT  AS  OTHERWISE PROVIDED IN SECTION
42a-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 ENDORSEMENT OR
INSTRUCTION;
    (2)   AFTER  A  DEMAND  THAT  THE  ISSUER  NOT
REGISTER   TRANSFER   BECAME    EFFECTIVE    UNDER
SUBSECTION (a) OF SECTION 42a-8-403 AND THE ISSUER
DID NOT COMPLY  WITH  SUBSECTION  (b)  OF  SECTION
42a-8-403;
    (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)  OF
THIS  SECTION  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 26 OF THIS ACT.
    (c)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBSECTION  (a)  OF  THIS  SECTION  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 ENDORSEMENT OR INSTRUCTION.
    Sec.  38.  Section  42a-8-405  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  If  a  certificated  security  has  been
lost, apparently destroyed, or  wrongfully  taken,
and  the  owner fails to notify the issuer of that
fact within a reasonable time after he has  notice
of  it  and the issuer registers a transfer of the
security before receiving notification, the  owner
is precluded from asserting against the issuer any
claim for registering the transfer  under  section
42a-8-404  or  any  claim  to a new security under
this section.
    (2)  If  the  owner of a certificated security
claims that the security has been lost,  destroyed
or  wrongfully taken, the issuer shall issue a new
certificated security or, at  the  option  of  the
issuer,  an  equivalent uncertificated security in
place of the original security if the  owner:  (a)
So  requests before the issuer has notice that the
security  has  been  acquired  by  a   bona   fide
purchaser;  (b) files with the issuer a sufficient
indemnity  bond;  and  (c)  satisfies  any   other
reasonable requirements imposed by the issuer.
    (3)  If, after the issue of a new certificated
or uncertificated security, a bona fide  purchaser
of  the original certificated security presents it
for registration of  transfer,  the  issuer  shall
register  the  transfer  unless registration would
result in overissue, in which event  the  issuer's
liability  is  governed  by  section 42a-8-104. In
addition to any rights on the indemnity bond,  the
issuer  may  recover the new certificated security
from the person to  whom  it  was  issued  or  any
person   taking  under  him  except  a  bona  fide
purchaser  or  may   cancel   the   uncertificated
security  unless  a  bona  fide  purchaser  or any
person taking under a bona fide purchaser is  then
the   registered   owner   or  registered  pledgee
thereof.]
    (a)  IF  AN  OWNER OF A CERTIFICATED SECURITY,
WHETHER IN REGISTERED OR BEARER FORM, CLAIMS  THAT
THE   CERTIFICATE  HAS  BEEN  LOST,  DESTROYED  OR
WRONGFULLY TAKEN, THE ISSUER  SHALL  ISSUE  A  NEW
CERTIFICATE IF THE OWNER:
    (1)  SO  REQUESTS BEFORE THE ISSUER HAS NOTICE
THAT  THE  CERTIFICATE  HAS  BEEN  ACQUIRED  BY  A
PROTECTED PURCHASER;
    (2)   FILES   WITH  THE  ISSUER  A  SUFFICIENT
INDEMNITY BOND; AND
    (3)  SATISFIES  OTHER  REASONABLE REQUIREMENTS
IMPOSED BY THE ISSUER.
    (b)  IF,  AFTER  THE  ISSUE  OF A NEW SECURITY
CERTIFICATE, A PROTECTED PURCHASER OF THE ORIGINAL
CERTIFICATE   PRESENTS   IT  FOR  REGISTRATION  OF
TRANSFER, THE ISSUER SHALL REGISTER  THE  TRANSFER
UNLESS  AN  OVERISSUE  WOULD RESULT. IN THAT CASE,
THE ISSUER'S LIABILITY IS GOVERNED BY  SECTION  26
OF  THIS  ACT.  IN  ADDITION  TO ANY RIGHTS ON THE
INDEMNITY BOND, AN  ISSUER  MAY  RECOVER  THE  NEW
CERTIFICATE FROM A PERSON TO WHOM IT WAS ISSUED OR
ANY PERSON TAKING  UNDER  THAT  PERSON,  EXCEPT  A
PROTECTED PURCHASER.
    Sec.  39.  Section  42a-8-406  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)   If  a  person  acts  as  authenticating
trustee, transfer agent, registrar, or other agent
for  an issuer in the registration of transfers of
its certificated securities or in the registration
of   transfers,   pledges   and  releases  of  its
uncertificated securities, in  the  issue  of  new
securities  or  in the cancellation of surrendered
securities: (a) He is under a duty to  the  issuer
to  exercise  good  faith  and  due  diligence  in
performing his functions; and (b) with  regard  to
the  particular  functions he performs, he has the
same obligation  to  the  holder  or  owner  of  a
certificated  security  or to the owner or pledgee
of an uncertificated security  and  has  the  same
rights  and privileges as the issuer has in regard
to those functions.
    (2)   Notice  to  an  authenticating  trustee,
transfer agent, registrar or other agent is notice
to  the  issuer  with  respect  to  the  functions
performed by the agent.]
    IF  A  SECURITY  CERTIFICATE  HAS  BEEN  LOST,
APPARENTLY DESTROYED, OR WRONGFULLY TAKEN, AND THE
OWNER  FAILS  TO  NOTIFY  THE  ISSUER OF THAT FACT
WITHIN A  REASONABLE  TIME  AFTER  THE  OWNER  HAS
NOTICE  OF  IT AND THE ISSUER REGISTERS A TRANSFER
OF THE SECURITY BEFORE RECEIVING NOTIFICATION, THE
OWNER  MAY  NOT  ASSERT AGAINST THE ISSUER A CLAIM
FOR  REGISTERING  THE   TRANSFER   UNDER   SECTION
42a-8-404,  AS  AMENDED BY SECTION 37 OF THIS ACT,
OR A CLAIM TO A  NEW  SECURITY  CERTIFICATE  UNDER
SECTION  42a-8-405,  AS  AMENDED  BY SECTION 38 OF
THIS ACT.
    Sec.  40.  Section  42a-8-407  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    [(1)  No issuer is subject to the requirements
of this section unless it  regularly  maintains  a
system   for   issuing  the  class  of  securities
involved  under  which   both   certificated   and
uncertificated  securities are regularly issued to
the category of owners, which includes the  person
in   whose   name   the  new  security  is  to  be
registered.
    (2)  Upon surrender of a certificated security
with all necessary endorsements  and  presentation
of  a  written  request by the person surrendering
the security, the issuer, if he has no duty as  to
adverse   claims   or  has  discharged  the  duty,
pursuant to section 42a-8-403, shall issue to  the
person or a person designated by him an equivalent
uncertificated  security  subject  to  all  liens,
restrictions  and  claims  that  were noted on the
certificated security.
    (3)  Upon  receipt  of  a transfer instruction
originated  by  an  appropriate  person   who   so
requests, the issuer of an uncertificated security
shall cancel the uncertificated security and issue
an  equivalent certificated security on which must
be noted conspicuously any liens and  restrictions
of  the issuer and any adverse claims, as to which
the issuer has a  duty  under  subsection  (4)  of
section  42a-8-403  to  which  the  uncertificated
security was subject.  The  certificated  security
shall  be  registered in the name of and delivered
to:   (a)   The   registered   owner,    if    the
uncertificated  security  was  not  subject  to  a
registered pledge; or (b) the registered  pledgee,
if  the  uncertificated  security was subject to a
registered pledge.]
    A  PERSON  ACTING AS AUTHENTICATING TRUSTEE, A
TRANSFER AGENT, REGISTRAR OR OTHER  AGENT  FOR  AN
ISSUER  IN  THE  REGISTRATION  OF  TRANSFER OF ITS
SECURITIES,  IN  THE   ISSUE   OF   NEW   SECURITY
CERTIFICATES  OR  UNCERTIFICATED SECURITIES, OR IN
THE   CANCELLATION   OF    SURRENDERED    SECURITY
CERTIFICATES HAS THE SAME OBLIGATION TO THE HOLDER
OR  OWNER  OF  A  CERTIFICATED  OR  UNCERTIFICATED
SECURITY  WITH  REGARD TO THE PARTICULAR FUNCTIONS
PERFORMED AS THE ISSUER HAS  IN  REGARD  TO  THOSE
FUNCTIONS.
    Sec.  41. (NEW) (a) "Securities account" means
an account to which a financial asset is or may be
credited  in  accordance  with  an agreement under
which   the   person   maintaining   the   account
undertakes  to  treat  the  person  for  whom  the
account is maintained as entitled to exercise  the
rights that comprise the financial asset.
    (b)    Except   as   otherwise   provided   in
subsections (d) and (e) of this section, a  person
acquires  a  security  entitlement if a securities
intermediary:
    (1)  Indicates  by book entry that a financial
asset has been credited to the person's securities
account;
    (2)   Receives  a  financial  asset  from  the
person or  acquires  a  financial  asset  for  the
person  and, in either case, accepts it for credit
to the person's securities account; or
    (3)   Becomes   obligated   under  other  law,
regulation or rule to credit a financial asset  to
the person's securities account.
    (c)  If  a condition of subsection (b) of this
section has been met,  a  person  has  a  security
entitlement    even    though    the    securities
intermediary does not itself  hold  the  financial
asset.
    (d)  If  a  securities  intermediary  holds  a
financial  asset  for  another  person,  and   the
financial  asset  is  registered  in  the name of,
payable to the order of, or specially endorsed  to
the other person, and has not been endorsed to the
securities intermediary or  in  blank,  the  other
person  is  treated as holding the financial asset
directly  rather  than  as   having   a   security
entitlement with respect to the financial asset.
    (e)    Issuance   of   a   security   is   not
establishment of a security entitlement.
    Sec.  42.  (NEW) An action based on an adverse
claim to a  financial  asset,  whether  framed  in
conversion,    replevin,    constructive    trust,
equitable  lien  or  other  theory,  may  not   be
asserted  against a person who acquires a security
entitlement under section 41 of this act for value
and without notice of the adverse claim.
    Sec.  43.  (NEW)  (a)  To the extent necessary
for  a  securities  intermediary  to  satisfy  all
security   by   entitlements  with  respect  to  a
particular financial asset, all interests in  that
financial    asset    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.
    (b)  An entitlement holder's property interest
with respect to a particular financial asset under
subsection  (a)  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.
    (c)  An entitlement holder's property interest
with respect to a particular financial asset under
subsection  (a)  of  this  section may be enforced
against  the  securities  intermediary   only   by
exercise  of the entitlement holder's rights under
sections 45 to 48, inclusive, of this act.
    (d)  An entitlement holder's property interest
with respect to a particular financial asset under
subsection  (a)  of  this  section may be enforced
against a purchaser  of  the  financial  asset  or
interest therein only if:
    (1)    Insolvency    proceedings   have   been
initiated   by   or   against    the    securities
intermediary;
    (2)  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;
    (3)  The  securities intermediary violated its
obligations  under  section   44   of   this   act
transferring   the  financial  asset  or  interest
therein to the purchaser; and
    (4)  The  purchaser  is  not  protected  under
subsection (e) 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.
    (e)   An   action  based  on  the  entitlement
holder's  property  interest  with  respect  to  a
particular financial asset under subsection (a) of
this  section,  whether  framed   in   conversion,
replevin,  constructive  trust,  equitable lien or
other theory, may  not  be  asserted  against  any
buyer of a financial asset or interest therein who
gives value and does not act in collusion with the
securities    intermediary    in   violating   the
securities   intermediary's   obligations    under
section 44 of this act.
    Sec.  44.  (NEW) (a) A securities intermediary
shall promptly obtain and  thereafter  maintain  a
financial asset in a quantity corresponding to the
aggregate of  all  security  entitlements  it  has
established  in  favor  of its entitlement holders
with  respect  to  that   financial   asset.   The
securities   intermediary   may   maintain   those
financial assets directly or through one  or  more
other securities intermediaries.
    (b)  Except  to the extent otherwise agreed by
its entitlement holder, a securities  intermediary
may   not   grant  any  security  interests  in  a
financial  asset  it  is  obligated  to   maintain
pursuant to subsection (a) of this section.
    (c)  A  securities  intermediary satisfies the
duty in subsection (a) of this section if:
    (1)  The  securities  intermediary  acts  with
respect  to  the  duty  as  agreed  upon  by   the
entitlement     holder    and    the    securities
intermediary; or
    (2)   In   the   absence   of  agreement,  the
securities  intermediary  exercises  due  care  in
accordance with reasonable commercial standards to
obtain and maintain the financial asset.
    (d)  This section does not apply to a clearing
corporation that  is  itself  the  obligor  of  an
option   or   similar   obligation  to  which  its
entitlement holders have security entitlements.
    Sec.  45.  (NEW) (a) A securities intermediary
shall  take  action  to  obtain   a   payment   or
distribution  made  by  the  issuer of a financial
asset. A  securities  intermediary  satisfies  the
duty if:
    (1)  The  securities  intermediary  acts  with
respect  to  the  duty  as  agreed  upon  by   the
entitlement     holder    and    the    securities
intermediary; or
    (2)   In   the   absence   of  agreement,  the
securities  intermediary  exercises  due  care  in
accordance with reasonable commercial standards to
attempt to obtain the payment or distribution.
    (b)  A securities intermediary is obligated to
its  entitlement   holder   for   a   payment   or
distribution  made  by  the  issuer of a financial
asset if the payment or distribution  is  received
by the securities intermediary.
    Sec.   46.  (NEW)  A  securities  intermediary
shall exercise rights with respect to a  financial
asset  if  directed  to  do  so  by an entitlement
holder. A securities  intermediary  satisfies  the
duty if:
    (1)  The  securities  intermediary  acts  with
respect  to  the  duty  as  agreed  upon  by   the
entitlement     holder    and    the    securities
intermediary; or
    (2)   In   the   absence   of  agreement,  the
securities   intermediary   either   places    the
entitlement  holder  in a position to exercise the
rights  directly  or   exercises   due   care   in
accordance with reasonable commercial standards to
follow the direction of the entitlement holder.
    Sec.  47.  (NEW) (a) A securities intermediary
shall comply with  an  entitlement  order  if  the
entitlement order is originated by the appropriate
person,  the  securities  intermediary   has   had
reasonable  opportunity  to assure itself that the
entitlement order is genuine and  authorized,  and
the  securities  intermediary  has  had reasonable
opportunity to comply with the entitlement  order.
A securities intermediary satisfies the duty if:
    (1)  The  securities  intermediary  acts  with
respect  to  the  duty  as  agreed  upon  by   the
entitlement     holder    and    the    securities
intermediary; or
    (2)   In   the   absence   of  agreement,  the
securities  intermediary  exercises  due  care  in
accordance with reasonable commercial standards to
comply with the entitlement order.
    (b)  If  a securities intermediary transfers a
financial  asset  pursuant   to   an   ineffective
entitlement  order,  the  securities  intermediary
shall reestablish a security entitlement in  favor
of  the  person  entitled to it, and pay or credit
any payments or distributions that the person  did
not  receive as a result of the wrongful transfer.
If   the   securities   intermediary   does    not
reestablish a security entitlement, the securities
intermediary is liable to the  entitlement  holder
for damages.
    Sec.   48.  (NEW)  A  securities  intermediary
shall act  at  the  direction  of  an  entitlement
holder  to  change  a  security  entitlement  into
another available form of holding  for  which  the
entitlement  holder  is  eligible, or to cause the
financial asset to be transferred to a  securities
account  of  the  entitlement  holder with another
securities intermediary. A securities intermediary
satisfies the duty if:
    (1)   The   securities  intermediary  acts  as
agreed upon by  the  entitlement  holder  and  the
securities intermediary; or
    (2)   In   the   absence   of  agreement,  the
securities  intermediary  exercises  due  care  in
accordance with reasonable commercial standards to
follow the direction of the entitlement holder.
    Sec.  49. (NEW) (a) If the substance of a duty
imposed upon a securities intermediary by sections
44 to 48, inclusive, of this act is the subject of
other statute, regulation or rule, compliance with
that  statute,  regulation  or  rule satisfies the
duty.
    (b)  To the extent that specific standards for
the performance of  the  duties  of  a  securities
intermediary  or  the exercise of the rights of an
entitlement holder  are  not  specified  by  other
statute,   regulation  or  rule  or  by  agreement
between   the    securities    intermediary    and
entitlement  holder,  the  securities intermediary
shall  perform  its  duties  and  the  entitlement
holder shall exercise its rights in a commercially
reasonable manner.
    (c)    The    obligation   of   a   securities
intermediary to  perform  the  duties  imposed  by
sections  44  to  48,  inclusive,  of  this act is
subject to:
    (1)  Rights  of  the  securities  intermediary
arising  out  of  a  security  interest  under   a
security  agreement with the entitlement holder or
otherwise; and
    (2)  Rights  of  the  securities  intermediary
under other law, regulation, rule or agreement  to
withhold  performance of its duties as a result of
unfulfilled obligations of the entitlement  holder
to the securities intermediary.
    (d)  Sections 44 to 48, inclusive, of this act
do not require a securities intermediary  to  take
any  action  that  is prohibited by other statute,
regulation or rule.
    Sec.  50.  (NEW)  (a)  An  action  based on an
adverse claim to a  financial  asset  or  security
entitlement,   whether   framed   in   conversion,
replevin, constructive trust,  equitable  lien  or
other theory, may not be asserted against a person
who buys a security entitlement,  or  an  interest
therein,   from   an  entitlement  holder  if  the
purchaser gives value, does not have notice of the
adverse claim, and obtains control.
    (b)  If  an  adverse claim could not have been
asserted  against  an  entitlement  holder   under
section  42  of this act, the adverse claim cannot
be asserted  against  a  person  who  purchases  a
security entitlement, or an interest therein, from
the entitlement holder.
    (c)  In  a  case  not  covered by the priority
rules in article 9, a purchaser  for  value  of  a
security  entitlement, or an interest therein, who
obtains control has priority over a purchaser of a
security  entitlement, or an interest therein, who
does  not  obtain  control.  Purchasers  who  have
control  rank  equally,  except  that a securities
intermediary as  purchaser  has  priority  over  a
conflicting   purchaser  who  has  control  unless
otherwise agreed by the securities intermediary.
    Sec.   51.   (NEW)  (a)  Except  as  otherwise
provided in subsection (b) of this section,  if  a
securities  intermediary  does not have sufficient
interests  in  a  particular  financial  asset  to
satisfy   both   its  obligations  to  entitlement
holders who have  security  entitlements  to  that
financial  asset  and its obligation to a creditor
of the securities intermediary who has a  security
interest  in  that  financial asset, the claims of
entitlement holders, other than the creditor, have
priority over the claim of the creditor.
    (b)  If  a  clearing corporation does not have
sufficient financial assets to  satisfy  both  its
obligations   to   entitlement  holders  who  have
security entitlements with respect to a  financial
asset  and  its  obligation  to  a creditor of the
clearing corporation who has a  security  interest
in that financial asset, the claim of the creditor
has  priority  over  the  claims  of   entitlement
holders.
    Sec.  52. Subsection (6) of section 42a-9-103a
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    [(6)  The  law,  including  conflict  of  laws
rules, of the jurisdiction of organization of  the
issuer  governs  the  perfection and the effect of
perfection or nonperfection of a security interest
in uncertificated securities.]
    (6)  (a) THIS SUBSECTION APPLIES TO INVESTMENT
PROPERTY.
    (b)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBDIVISION (f) OF  THIS  SUBSECTION,  DURING  THE
TIME  THAT  A SECURITY CERTIFICATE IS LOCATED IN A
JURISDICTION, PERFECTION OF A  SECURITY  INTEREST,
THE EFFECT OF PERFECTION OR NONPERFECTION, AND THE
PRIORITY   OF   A   SECURITY   INTEREST   IN   THE
CERTIFICATED   SECURITY  REPRESENTED  THEREBY  ARE
GOVERNED BY THE LOCAL LAW OF THAT JURISDICTION.
    (c)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBDIVISION (f) OF THIS SUBSECTION, PERFECTION  OF
A  SECURITY  INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION  AND  THE  PRIORITY  OF  A  SECURITY
INTEREST   IN   AN   UNCERTIFICATED  SECURITY  ARE
GOVERNED  BY  THE  LOCAL  LAW  OF   THE   ISSUER'S
JURISDICTION  AS  SPECIFIED  IN  SUBSECTION (d) OF
SECTION 10 OF THIS ACT.
    (d)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBDIVISION (f) OF THIS SUBSECTION, PERFECTION  OF
A  SECURITY  INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION  AND  THE  PRIORITY  OF  A  SECURITY
INTEREST  IN  A SECURITY ENTITLEMENT OR SECURITIES
ACCOUNT ARE GOVERNED  BY  THE  LOCAL  LAW  OF  THE
SECURITIES    INTERMEDIARY'S    JURISDICTION    AS
SPECIFIED IN SUBSECTION (e) OF SECTION 10 OF  THIS
ACT.
    (e)    EXCEPT   AS   OTHERWISE   PROVIDED   IN
SUBDIVISION (f) OF THIS SUBSECTION, PERFECTION  OF
A  SECURITY  INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION  AND  THE  PRIORITY  OF  A  SECURITY
INTEREST  IN  A  COMMODITY  CONTRACT  OR COMMODITY
ACCOUNT ARE GOVERNED  BY  THE  LOCAL  LAW  OF  THE
COMMODITY    INTERMEDIARY'S    JURISDICTION.   THE
FOLLOWING    RULES    DETERMINE    A    "COMMODITY
INTERMEDIARY'S  JURISDICTION" FOR PURPOSES OF THIS
SUBDIVISION:
    (i)  IF  AN  AGREEMENT  BETWEEN  THE COMMODITY
INTERMEDIARY AND COMMODITY CUSTOMER SPECIFIES THAT
IT   IS  GOVERNED  BY  THE  LAW  OF  A  PARTICULAR
JURISDICTION, THAT JURISDICTION IS  THE  COMMODITY
INTERMEDIARY'S JURISDICTION.
    (ii)  IF  AN  AGREEMENT  BETWEEN THE COMMODITY
INTERMEDIARY  AND  COMMODITY  CUSTOMER  DOES   NOT
SPECIFY   THE   GOVERNING   LAW   AS  PROVIDED  IN
SUBPARAGRAPH  (i)   OF   THIS   SUBDIVISION,   BUT
EXPRESSLY  SPECIFIES THAT THE COMMODITY ACCOUNT IS
MAINTAINED  AT   AN   OFFICE   IN   A   PARTICULAR
JURISDICTION,  THAT  JURISDICTION IS THE COMMODITY
INTERMEDIARY'S JURISDICTION.
    (iii)  IF  AN  AGREEMENT BETWEEN THE COMMODITY
INTERMEDIARY  AND  COMMODITY  CUSTOMER  DOES   NOT
SPECIFY A JURISDICTION AS PROVIDED IN SUBPARAGRAPH
(i) OR (ii) OF  THIS  SUBDIVISION,  THE  COMMODITY
INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN
WHICH IS  LOCATED  THE  OFFICE  IDENTIFIED  IN  AN
ACCOUNT   STATEMENT  AS  THE  OFFICE  SERVING  THE
COMMODITY CUSTOMER'S ACCOUNT.
    (iv)  IF  AN  AGREEMENT  BETWEEN THE COMMODITY
INTERMEDIARY  AND  COMMODITY  CUSTOMER  DOES   NOT
SPECIFY A JURISDICTION AS PROVIDED IN SUBPARAGRAPH
(i) OR (ii) OF THIS  SUBDIVISION  AND  AN  ACCOUNT
STATEMENT  DOES NOT IDENTIFY AN OFFICE SERVING THE
COMMODITY  CUSTOMER'S  ACCOUNT  AS   PROVIDED   IN
SUBPARAGRAPH   (iii)   OF  THIS  SUBDIVISION,  THE
COMMODITY  INTERMEDIARY'S  JURISDICTION   IS   THE
JURISDICTION   IN   WHICH  IS  LOCATED  THE  CHIEF
EXECUTIVE OFFICE OF THE COMMODITY INTERMEDIARY.
    (f)  PERFECTION  OF  A  SECURITY  INTEREST  BY
FILING,  AUTOMATIC  PERFECTION   OF   A   SECURITY
INTEREST  IN  INVESTMENT  PROPERTY  GRANTED  BY  A
BROKER OR SECURITIES  INTERMEDIARY  AND  AUTOMATIC
PERFECTION  OF  A SECURITY INTEREST IN A COMMODITY
CONTRACT  OR  COMMODITY  ACCOUNT  GRANTED   BY   A
COMMODITY  INTERMEDIARY  ARE GOVERNED BY THE LOCAL
LAW OF THE JURISDICTION IN  WHICH  THE  DEBTOR  IS
LOCATED.
    Sec.  53.  Section  42a-9-105  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)   In   this  article  unless  the  context
otherwise requires: (a) "Account debtor" means the
person  who  is  obligated  on an account, chattel
paper or general intangible; (b)  "chattel  paper"
means  a writing or writings which evidence both a
monetary obligation and a security interest in  or
a  lease of specific goods, but a charter or other
contract involving the use or hire of a vessel  is
not chattel paper. When a transaction is evidenced
both by such a security agreement or a  lease  and
by  an  instrument or a series of instruments, the
group  of  writings  taken  together   constitutes
chattel paper; (c) "collateral" means the property
subject  to  a  security  interest,  and  includes
accounts  and  chattel paper which have been sold;
(d) "debtor" means the person who owes  a  payment
or  other  performance  of the obligation secured,
whether or not  he  owns  or  has  rights  in  the
collateral, and includes the seller of accounts or
chattel paper. Where the debtor and the  owner  of
the  collateral  are not the same person, the term
"debtor" means the owner of the collateral in  any
provision   of   the   article  dealing  with  the
collateral, the obligor in any  provision  dealing
with  the  obligation,  and may include both where
the context so  requires;  (e)  "deposit  account"
means  a  demand,  time, savings, passbook or like
account maintained with a bank, savings  and  loan
association,  credit  union  or like organization,
other than an account evidenced by  a  certificate
of deposit; (f) "document" means document of title
as defined in the general definitions  of  section
42a-1-201,  and a receipt of the kind described in
subsection   (2)   of   section   42a-7-201;   (g)
"encumbrance"  includes  real estate mortgages and
other liens on real estate and all other rights in
real  estate  that are not ownership interest; (h)
"goods" includes all things which are  movable  at
the  time  the security interest attaches or which
are fixtures, as provided  in  section  42a-9-313,
but    does    not   include   money,   documents,
instruments,   INVESTMENT   PROPERTY,    accounts,
chattel  paper, general intangibles or minerals or
the  like,   including   oil   and   gas,   before
extraction.  "Goods" also includes standing timber
which is to be cut and removed under a  conveyance
or  contract for sale, the unborn young of animals
and  growing  crops;  (i)  "instrument"  means   a
negotiable   instrument,  as  defined  in  section
42a-3-104, [or a certificated security, as defined
in  section 42a-8-102,] or any other writing which
evidences a right to the payment of money  and  is
not itself a security agreement or lease and is of
a type which is in  ordinary  course  of  business
transferred   by   delivery   with  any  necessary
endorsement  or  assignment.  THE  TERM  DOES  NOT
INCLUDE  INVESTMENT PROPERTY; (j) "mortgage" means
a consensual interest created  by  a  real  estate
mortgage, a trust deed on real estate or the like;
(k) an advance is made "pursuant to commitment" if
the  secured  party  has bound himself to make it,
whether or not a subsequent event  of  default  or
other event not within his control has relieved or
may relieve him from his obligation; (l) "security
agreement"  means  an  agreement  which creates or
provides for a  security  interest;  (m)  "secured
party"  means  a lender, seller or other person in
whose  favor  there  is   a   security   interest,
including  a  person  to  whom accounts or chattel
paper  have  been  sold.  When  the   holders   of
obligations  issued  under  an indenture of trust,
equipment  trust  agreement  or   the   like   are
represented  by  a  trustee  or  other person, the
representative   is   the   secured   party;   (n)
"transmitting  utility" means any person primarily
engaged in the railroad business, the electric  or
electronics  communications transmission business,
the transmission of  goods  by  pipeline,  or  the
transmission or the production and transmission of
electricity, steam, gas or water, or the provision
of sewer service.
    (2)   Other   definitions   applying  to  this
article and the sections in which they appear are:
    "Account". Section 42a-9-106.
    "Attach". Section 42a-9-203.
    "COMMODITY CONTRACT". SECTION 55 OF THIS ACT.
    "COMMODITY CUSTOMER". SECTION 55 OF THIS ACT.
    "COMMODITY INTERMEDIARY". SECTION  55  OF THIS
ACT.
    ["Consumer goods". Section 42a-9-109(1).]
    "Construction mortgage". Section 42a-9-313(1).
    "CONSUMER GOODS". SECTION 42a-9-109(1).
    "CONTROL". SECTION 55 OF THIS ACT.
    "Equipment". Section 42a-9-109(2).
    "Farm products". Section 42a-9-109(3).
    "Fixture". Section 42a-9-313.
    "Fixture filing". Section 42a-9-313.
    "General intangibles". Section 42a-9-106.
    "Inventory". Section 42a-9-109(4).
    "INVESTMENT PROPERTY". SECTION 55 OF THIS ACT.
    "Lien creditor". Section 42a-9-301(3).
    "Proceeds". Section 42a-9-306(1).
    "Purchase  money security  interest".  Section
42a-9-107.
    "United States". Section 42a-9-103a.
    (3)   The   following   definitions  in  other
articles apply to this article:
    "BROKER". SECTION 42a-8-102.
    "CERTIFICATED SECURITY". SECTION 42a-8-102.
    "Check". Section 42a-3-104.
    "CLEARING CORPORATION". SECTION 42a-8-102.
    "Contract for sale". Section 42a-2-106.
    "CONTROL". SECTION 42a-8-106.
    "DELIVERY". SECTION 42a-8-301.
    "ENTITLEMENT HOLDER". SECTION 42a-8-102.
    "FINANCIAL ASSET". SECTION 42a-8-102.
    "Holder in due course". Section 42a-3-302.
    "Letter of credit". Section 42a-5-102.
    "Note". Section 42a-3-104.
    "Proceeds  of a  letter  of  credit".  Section
42a-5-114(a).
    "Sale". Section 42a-2-106.
    "SECURITIES INTERMEDIARY". SECTION 42a-8-102.
    "SECURITY". SECTION 42a-8-102.
    "SECURITY CERTIFICATE". SECTION 42a-8-102.
    "SECURITY ENTITLEMENT". SECTION 42a-8-102.
    "UNCERTIFICATED SECURITY". SECTION 42a-8-102.
    (4)  In  addition  article  1 contains general
definitions and  principles  of  construction  and
interpretation applicable throughout this article.
    Sec.  54.  Section  42a-9-106  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    "Account"  means  any  right  to  payment  for
goods sold or  leased  or  for  services  rendered
which is not evidenced by an instrument or chattel
paper, whether  or  not  it  has  been  earned  by
performance.   "General   intangibles"  means  any
personal property,  including  things  in  action,
other   than   goods,   accounts,  chattel  paper,
documents,   instruments,   INVESTMENT   PROPERTY,
rights  to  proceeds  of written letters of credit
and  money.  All  rights  to  payment  earned   or
unearned   under   a  charter  or  other  contract
involving the use or hire  of  a  vessel  and  all
rights  incident  to  the  charter or contract are
accounts.
    Sec. 55. (NEW) (1) In article 9:
    (a)   "Commodity  account"  means  an  account
maintained by a commodity intermediary in which  a
commodity  contract  is  carried  for  a commodity
customer.
    (b)  "Commodity  contract"  means  a commodity
futures contract, an option on a commodity futures
contract,  a  commodity  option, or other contract
that, in each case, is: (i) Traded on  or  subject
to  the  rules  of  a board of trade that has been
designated  as  a  contract  market  for  such   a
contract pursuant to the federal commodities laws;
or (ii) traded on a  foreign  commodity  board  of
trade,  exchange  or market, and is carried on the
books of a commodity intermediary for a  commodity
customer.
    (c)  "Commodity  customer"  means a person for
whom a commodity intermediary carries a  commodity
contract on its books.
    (d)  "Commodity  intermediary"  means:  (i)  A
person who is registered as a  futures  commission
merchant  under  the  federal commodities laws; or
(ii) a person who in the ordinary  course  of  his
business provides clearance or settlement services
for a board of trade that has been designated as a
contract    market   pursuant   to   the   federal
commodities laws.
    (e)  "Control"  with respect to a certificated
security,  uncertificated  security  or   security
entitlement  has  the meaning specified in section
42a-8-106 of the general statutes, as  amended  by
section 6 of this act. A secured party has control
over a commodity contract if  by  agreement  among
the commodity customer, the commodity intermediary
and the secured party, the commodity  intermediary
has   agreed   that   it   will  apply  any  value
distributed on account of the  commodity  contract
as  directed  by the secured party without further
consent by the commodity customer. If a  commodity
customer grants a security interest in a commodity
contract to its own  commodity  intermediary,  the
commodity   intermediary   as  secured  party  has
control.  A  secured  party  has  control  over  a
securities  account  or  commodity  account if the
secured  party  has  control  over  all   security
entitlements or commodity contracts carried in the
securities account or commodity account.
    (f)   "Investment   property"   means:  (i)  A
security, whether certificated or  uncertificated;
(ii)  a  security  entitlement;  (iii) a commodity
contract; or (iv) a commodity account.
    (2)  Attachment  or  perfection  of a security
interest  in  a   securities   account   is   also
attachment or perfection of a security interest in
all   security   entitlements   carried   in   the
securities  account. Attachment or perfection of a
security interest in a commodity account  is  also
attachment or perfection of a security interest in
all commodity contracts carried in  the  commodity
account.
    (3)  A description of collateral in a security
agreement or financing statement is sufficient  to
create   or  perfect  a  security  interest  in  a
certificated  security,  uncertificated  security,
security    entitlement,    securities    account,
commodity contract or commodity account whether it
describes  the  collateral  by  those terms, or as
investment property,  or  by  description  of  the
underlying  security, financial asset or commodity
contract. A  description  of  investment  property
collateral  in  a  security agreement or financing
statement  is  sufficient  if  it  identifies  the
collateral  by  specific  listing, by category, by
quantity,  by  a  computational  or   allocational
formula  or  procedure, or by any other method, if
the identity  of  the  collateral  is  objectively
determinable.
    (4)  Perfection  of  a  security  interest  in
investment property is governed by  the  following
rules:
    (a)   A   security   interest   in  investment
property may be perfected by control.
    (b)    Except   as   otherwise   provided   in
subdivisions (c) and (d)  of  this  subsection,  a
security  interest  in  investment property may be
perfected by filing.
    (c)  If  the  debtor is a broker or securities
intermediary, a security  interest  in  investment
property is perfected when it attaches. The filing
of  a  financing  statement  with  respect  to   a
security  interest  in investment property granted
by a broker  or  securities  intermediary  has  no
effect for purposes of perfection or priority with
respect to that security interest.
    (d)  If  a debtor is a commodity intermediary,
a security interest in a commodity contract  or  a
commodity  account  is perfected when it attaches.
The filing of a financing statement  with  respect
to  a security interest in a commodity contract or
a  commodity  account  granted  by   a   commodity
intermediary   has   no  effect  for  purposes  of
perfection  or  priority  with  respect  to   that
security interest.
    (5)   Priority  between  conflicting  security
interests  in  the  same  investment  property  is
governed by the following rules:
    (a)  A  security  interest  of a secured party
who  has  control  over  investment  property  has
priority  over  a  security  interest of a secured
party  who  does  not  have   control   over   the
investment property.
    (b)    Except   as   otherwise   provided   in
subdivisions  (c)  and  (d)  of  this  subsection,
conflicting  security interests of secured parties
each of whom has control rank equally.
    (c)   Except   as   otherwise  agreed  by  the
securities intermediary, a security interest in  a
security   entitlement  or  a  securities  account
granted   to   the   debtor's    own    securities
intermediary   has   priority  over  any  security
interest granted by the debtor to another  secured
party.
    (d)   Except   as   otherwise  agreed  by  the
commodity intermediary, a security interest  in  a
commodity  contract or a commodity account granted
to the debtor's  own  commodity  intermediary  has
priority over any security interest granted by the
debtor to another secured party.
    (e)  Conflicting security interests granted by
a broker, a securities intermediary or a commodity
intermediary  which  are perfected without control
rank equally.
    (f)  In  all  other  cases,  priority  between
conflicting  security  interests   in   investment
property  is  governed by subsections (5), (6) and
(7) of section 42a-9-312 of the general  statutes,
as  amended  by section 64 of this act. Subsection
(4) of section 42a-9-312 of the general  statutes,
as  amended  by  section  64 of this act, does not
apply to investment property.
    (6)  If  a  security certificate in registered
form is delivered to a secured party  pursuant  to
agreement,  a  written  security  agreement is not
required for attachment or enforceability  of  the
security    interest,    delivery   suffices   for
perfection  of  the  security  interest,  and  the
security  interest has priority over a conflicting
security interest perfected by  means  other  than
control,   even  if  a  necessary  endorsement  is
lacking.
    Sec.   56.  (NEW)  (1)  If  a  person  buys  a
financial asset through a securities  intermediary
in  a  transaction in which the buyer is obligated
to  pay  the  purchase  price  to  the  securities
intermediary  at the time of the purchase, and the
securities  intermediary  credits  the   financial
asset to the buyer's securities account before the
buyer  pays  the  securities   intermediary,   the
securities intermediary has a security interest in
the  buyer's  security  entitlement  securing  the
buyer's obligation to pay. A security agreement is
not required for attachment or  enforceability  of
the  security  interest, and the security interest
is automatically perfected.
    (2)  If  a  certificated  security,  or  other
financial asset represented by a writing which  in
the  ordinary course of business is transferred by
delivery  with  any   necessary   endorsement   or
assignment  is  delivered pursuant to an agreement
between persons in the business  of  dealing  with
such   securities  or  financial  assets  and  the
agreement calls for delivery versus  payment,  the
person   delivering   the   certificate  or  other
financial asset has a  security  interest  in  the
certificated  security  or  other  financial asset
securing the seller's right to receive payment.  A
security  agreement is not required for attachment
or enforceability of the  security  interest,  and
the security interest is automatically perfected.
    Sec.  57.  Subsection (1) of section 42a-9-203
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    (1)  Subject  to  the  provisions  of  section
42a-4-210 on the security interest of a collecting
bank,  [section 42a-8-321 on security interests in
securities] SECTIONS 55 AND  56  OF  THIS  ACT  ON
SECURITY  INTERESTS  IN  INVESTMENT  PROPERTY  and
section 42a-9-113 on a security  interest  arising
under  article  2,  a  security  interest  is  not
enforceable against the debtor  or  third  parties
with respect to the collateral and does not attach
unless: (a) The collateral is in the possession of
the  secured  party  pursuant  to  agreement,  THE
COLLATERAL IS INVESTMENT PROPERTY AND THE  SECURED
PARTY  HAS  CONTROL  PURSUANT  TO AGREEMENT or the
debtor  has  signed  a  security  agreement  which
contains  a  description  of the collateral and in
addition, when the security interest covers  crops
growing  or  to  be  grown  or timber to be cut, a
description of the land concerned; (b)  value  has
been  given;  and (c) the debtor has rights in the
collateral.
    Sec.  58.  Subsection (1) of section 42a-9-301
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    (1)    Except   as   otherwise   provided   in
subsection (2) of  this  section,  an  unperfected
security  interest is subordinate to the rights of
(a) persons entitled  to  priority  under  section
42a-9-312;   (b)  a  person  who  becomes  a  lien
creditor   before   the   security   interest   is
perfected;  (c) in the case of goods, instruments,
documents, and chattel paper, a person who is  not
a secured party and who is a transferee in bulk or
other buyer not in ordinary course of business, or
is  a buyer of farm products in ordinary course of
business, to the extent that he  gives  value  and
receives   delivery   of  the  collateral  without
knowledge of the security interest and  before  it
is  perfected;  (d) in the case of accounts, [and]
general intangibles  AND  INVESTMENT  PROPERTY,  a
person  who  is  not  a secured party and who is a
transferee to  the  extent  that  he  gives  value
without  knowledge  of  the  security interest and
before it is perfected.
    Sec.  59.  Subsection (1) of section 42a-9-302
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    (1)  A  financing  statement  must be filed to
perfect  all   security   interests   except   the
following:  (a)  A security interest in collateral
in possession of the secured party  under  section
42a-9-305;  (b)  a  security  interest temporarily
perfected in instruments, CERTIFICATED  SECURITIES
or   documents   without  delivery  under  section
42a-9-304 or in  proceeds  for  a  ten-day  period
under  section  42a-9-306; (c) a security interest
created by an assignment of a beneficial  interest
in  a trust or a decedent's estate; (d) a purchase
money security interest  in  consumer  goods;  but
filing is required for a motor vehicle required to
be registered, and fixture filing is required  for
priority over conflicting interests in fixtures to
the extent provided in section 42a-9-313;  (e)  an
assignment  of accounts which does not alone or in
conjunction with other  assignments  to  the  same
assignee   transfer  a  significant  part  of  the
outstanding  accounts  of  the  assignor;  (f)   a
security interest of a collecting bank as provided
in section 42a-4-210 [or in securities as provided
in  section  42a-8-321] or arising under article 3
of this title or covered in subsection (3) of this
section;  (g) an assignment for the benefit of all
the creditors of the  transferor,  and  subsequent
transfers   by  the  assignee  thereunder;  (h)  A
SECURITY INTEREST IN INVESTMENT PROPERTY WHICH  IS
PERFECTED WITHOUT FILING UNDER SECTION 55 OR 56 OF
THIS ACT.
    Sec.  60.  Section  42a-9-304  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)  A  security  interest in chattel paper or
negotiable documents may be perfected by filing. A
security  interest  in the rights to proceeds of a
written letter of credit can be perfected only  by
the  secured  party's  taking  possession  of  the
letter of credit. A security interest in money  or
instruments,  other  than [certificated securities
or] instruments which constitute part  of  chattel
paper,  can  be  perfected  only  by  the  secured
party's taking possession, except as  provided  in
subsections  (4)  and  (5)  of  this  section  and
subsections (2) and (3) of section  42a-9-306,  on
proceeds.
    (2)  During  the  period that goods are in the
possession of the issuer of a negotiable  document
therefor,  a  security  interest  in  the goods is
perfected by perfecting a security interest in the
document,  and  any security interest in the goods
otherwise perfected during such period is  subject
thereto.
    (3)  A  security  interest  in  goods  in  the
possession of a bailee  other  than  one  who  has
issued a negotiable document therefor is perfected
by issuance of a  document  in  the  name  of  the
secured  party  or  by  the  bailee's  receipt  of
notification of the secured party's interest or by
filing as to the goods.
    (4)   A   security  interest  in  instruments,
[other  than]  certificated  securities   [,]   or
negotiable  documents  is perfected without filing
or the  taking  of  possession  for  a  period  of
twenty-one  days  from the time it attaches to the
extent that it arises for new value given under  a
written security agreement.
    (5)  A security interest remains perfected for
a period of twenty-one days without filing where a
secured party having a perfected security interest
in an  instrument,  [other  than]  a  certificated
security,   a  negotiable  document  or  goods  in
possession of a bailee  other  than  one  who  has
issued  a  negotiable document therefor: (a) Makes
available to the debtor  the  goods  or  documents
representing the goods for the purpose of ultimate
sale or exchange or for the  purpose  of  loading,
unloading,   storing,   shipping,   transshipping,
manufacturing,  processing  or  otherwise  dealing
with them in a manner preliminary to their sale or
exchange,   but   priority   between   conflicting
security  interests  in  the  goods  is subject to
subsection  (3)  of  section  42a-9-312;  or   (b)
delivers  the  instrument OR CERTIFICATED SECURITY
to the debtor for the purpose of ultimate sale  or
exchange  or  of presentation, collection, renewal
or registration of transfer.
    (6)   After   the  twenty-one  day  period  in
subsections (4) and (5)  perfection  depends  upon
compliance  with  applicable  provisions  of  this
article.
    Sec.  61.  Section  42a-9-305  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    A  security  interest in letters of credit and
advices of credit, goods, instruments, [other than
certificated    securities,]   money,   negotiable
documents or chattel paper may be perfected by the
secured   party's   taking   possession   of   the
collateral. A security interest in  the  right  to
proceeds  of  a  written  letter  of credit may be
perfected by the secured party's taking possession
of  the letter of credit. If such collateral other
than goods covered by  a  negotiable  document  is
held  by  a bailee, the secured party is deemed to
have possession from the time the bailee  receives
notification  of  the  secured party's interest. A
security interest is perfected by possession  from
the time possession is taken without relation back
and  continues  only  so  long  as  possession  is
retained,   unless  otherwise  specified  in  this
article. The security interest  may  be  otherwise
perfected  as  provided  in this article before or
after the period  of  possession  by  the  secured
party.
    Sec.  62.  Section  42a-9-306  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)  "Proceeds"  includes whatever is received
upon  the  sale,  exchange,  collection  or  other
disposition  of  collateral or proceeds. Insurance
payable  by  reason  of  loss  or  damage  to  the
collateral  is proceeds, except to the extent that
it is payable to a person other than  a  party  to
the  security  agreement.  Money,  checks, deposit
accounts and the like  are  "cash  proceeds".  All
other proceeds are "noncash proceeds".
    (2)   Except   where  this  article  otherwise
provides,  a  security   interest   continues   in
collateral notwithstanding sale, exchange or other
disposition thereof  unless  the  disposition  was
authorized  by  the  secured party in the security
agreement or otherwise, and also continues in  any
identifiable    proceeds   including   collections
received by the debtor.
    (3)  The  security  interest  in proceeds is a
continuously perfected security  interest  if  the
interest  in the original collateral was perfected
but it ceases to be a perfected security  interest
and  becomes unperfected ten days after receipt of
the proceeds by the  debtor  unless  (a)  a  filed
financing statement covers the original collateral
and  the  proceeds  are  collateral  in  which   a
security  interest  may  be perfected by filing in
the  office  or  offices   where   the   financing
statement  has been filed and, if the proceeds are
acquired with cash proceeds,  the  description  of
collateral  in  the  financing statement indicates
the types of property constituting  the  proceeds;
or  (b)  a  filed  financing  statement covers the
original   collateral   and   the   proceeds   are
identifiable  cash  proceeds;  OR (c) THE ORIGINAL
COLLATERAL  WAS  INVESTMENT   PROPERTY   AND   THE
PROCEEDS  ARE IDENTIFIABLE CASH PROCEEDS; or [(c)]
(d) the  security  interest  in  the  proceeds  is
perfected  before  the  expiration  of the ten-day
period. Except as  provided  in  this  section,  a
security  interest  in  proceeds  can be perfected
only by the methods  or  under  the  circumstances
permitted  in this article for original collateral
of the same type.
    (4)  In  the  event  of insolvency proceedings
instituted by or against a debtor, a secured party
with a perfected security interest in proceeds has
a  perfected  security  interest   only   in   the
following  proceeds:  (a)  In identifiable noncash
proceeds  and   in   separate   deposit   accounts
containing only proceeds; (b) in identifiable cash
proceeds in the form of  money  which  is  neither
commingled  with  other  money  nor deposited in a
deposit   account   prior   to   the    insolvency
proceedings;  (c) in identifiable cash proceeds in
the form of checks and  the  like  which  are  not
deposited  in  a  deposit  account  prior  to  the
insolvency proceedings; and (d) in  all  cash  and
deposit  accounts of the debtor, in which proceeds
have been commingled with  other  funds,  but  the
perfected security interest under this subdivision
(d) is (i) subject to any right  of  set-off;  and
(ii)  limited  to  an  amount not greater than the
amount of any cash proceeds received by the debtor
within  ten  days  before  the  institution of the
insolvency proceedings less the  sum  of  (A)  the
payments  to  the secured party on account of cash
proceeds received by the debtor during such period
and  (B)  the cash proceeds received by the debtor
during such period to which the secured  party  is
entitled under subdivisions (a) to (c), inclusive,
of this subsection.
    (5)  If  a sale of goods results in an account
or chattel  paper  which  is  transferred  by  the
seller  to  a  secured party, and if the goods are
returned to or are repossessed by  the  seller  or
the  secured  party, the following rules determine
priorities: (a) If the goods  were  collateral  at
the time of sale for an indebtedness of the seller
which  is  still  unpaid,  the  original  security
interest attaches again to the goods and continues
as  a  perfected  security  interest  if  it   was
perfected at the time when the goods were sold. If
the security interest was originally perfected  by
a filing which is still effective, nothing further
is required to continue the perfected  status;  in
any  other  case,  the  secured  party  must  take
possession of the returned or repossessed goods or
must file. (b) An unpaid transferee of the chattel
paper has a security interest in the goods against
the transferor. Such security interest is prior to
a security interest asserted under  paragraph  (a)
to  the  extent that the transferee of the chattel
paper  was  entitled  to  priority  under  section
42a-9-308. (c) An unpaid transferee of the account
has a security interest in the goods  against  the
transferor.  Such security interest is subordinate
to a security interest asserted under  subdivision
(a) of this subsection. (d) A security interest of
an unpaid transferee  asserted  under  subdivision
(b)  or (c) of this subsection has to be perfected
for protection against creditors of the transferor
and  purchasers  of  the  returned  or repossessed
goods.
    Sec.  63.  Section  42a-9-309  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    Nothing  in  this article limits the rights of
a holder in due course of a negotiable instrument,
as  defined  in  section 42a-3-302, or a holder to
whom a negotiable document of title has been  duly
negotiated  as  provided in section 42a-7-501 or a
[bona fide] PROTECTED purchaser of a  security  as
provided  in  section  [42a-8-302]  42a-8-303,  AS
AMENDED BY  SECTION  29  OF  THIS  ACT,  and  such
holders   or  purchasers  take  priority  over  an
earlier security interest even  though  perfected.
Filing  under  this  article  does  not constitute
notice of the security interest to such holders or
purchasers.
    Sec.  64.  Section  42a-9-312  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)  The  rules  of  priority  stated in other
sections  of  this  part  and  in  the   following
sections  shall  govern  when  applicable: Section
42a-4-210 with respect to the security interest of
collecting   banks   in   items  being  collected,
accompanying  documents  and   proceeds;   section
42a-9-103a  on security interests related to other
jurisdictions; section 42a-9-114 on  consignments;
SECTION  55  OF  THIS ACT ON SECURITY INTERESTS IN
INVESTMENT PROPERTY.
    (2)  A  perfected  security  interest in crops
for new  value  given  to  enable  the  debtor  to
produce the crops during the production season and
given not more than three months before the  crops
become  growing  crops  by  planting  or otherwise
takes priority over an earlier perfected  security
interest  to the extent that such earlier interest
secures  obligations  due  more  than  six  months
before  the crops become growing crops by planting
or otherwise, even though the  person  giving  new
value   had  knowledge  of  the  earlier  security
interest.
    (3)   A   perfected  purchase  money  security
interest  in  inventory  has   priority   over   a
conflicting   security   interest   in   the  same
inventory and also has  priority  in  identifiable
cash  proceeds  received on or before the delivery
of the inventory to a buyer if  (a)  the  purchase
money  security  interest is perfected at the time
the debtor receives possession of  the  inventory;
and  (b)  the  purchase  money secured party gives
notification in  writing  to  the  holder  of  the
conflicting  security  interest  if the holder had
filed a  financing  statement  covering  the  same
types  of  inventory  (i)  before  the date of the
filing made by the purchase money  secured  party,
or (ii) before the beginning of the twenty-one day
period where the purchase money security  interest
is   temporarily   perfected   without  filing  or
possession; and (c) the holder of the  conflicting
security interest receives the notification within
five years before the debtor  receives  possession
of  the inventory; and (d) the notification states
that the person giving the notice has  or  expects
to  acquire  a purchase money security interest in
inventory of the debtor, describing such inventory
by item or type.
    (4)  A  purchase  money  security  interest in
collateral other than inventory has priority  over
a   conflicting  security  interest  in  the  same
collateral or its proceeds if the  purchase  money
security  interest  is  perfected  at the time the
debtor receives possession of  the  collateral  or
within twenty days thereafter.
    (5)  In  all cases not governed by other rules
stated  in  this  section,  including   cases   of
purchase  money  security  interests  which do not
qualify for the special priorities  set  forth  in
subsections  (3) and (4) of this section, priority
between conflicting security interests in the same
collateral  shall  be  determined according to the
following   rules:   (a)   Conflicting    security
interests  rank  according  to priority in time of
filing or perfection. Priority dates from the time
a  filing is first made covering the collateral or
the time the security interest is first perfected,
whichever  is earlier, provided there is no period
thereafter  when  there  is  neither  filing   nor
perfection;  (b)  so  long as conflicting security
interests are unperfected, the first to attach has
priority.
    (6)  For  the  purposes  of  subsection (5) of
this section, a date of filing or perfection as to
collateral  is also a date of filing or perfection
as to proceeds.
    (7)  If  future  advances  are  made  while  a
security interest  is  perfected  by  filing,  the
taking  of possession, or under [section 42a-8-321
on securities] SECTION 55 OR 56  OF  THIS  ACT  ON
INVESTMENT PROPERTY, the security interest has the
same priority for the purposes of  subsection  (5)
of   this  section  with  respect  to  the  future
advances as it does  with  respect  to  the  first
advance.  If  a commitment is made before or while
the  security  interest  is  so   perfected,   the
security  interest  has  the  same  priority  with
respect to  advances  made  pursuant  thereto.  In
other  cases  a  perfected  security  interest has
priority from the date the advance is made.
    Sec.  65.  Section  42a-1-105  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (1)  Except  as  provided  hereafter  in  this
section, when a  transaction  bears  a  reasonable
relation  to  this state and also to another state
or nation the  parties  may  agree  that  the  law
either  of  this  state  or of such other state or
nation  shall  govern  their  rights  and  duties.
Failing  such  agreement  this  title  applies  to
transactions bearing an  appropriate  relation  to
this state.
    (2)  Where  one of the following provisions of
this title  specifies  the  applicable  law,  that
provision  governs  and  a  contrary  agreement is
effective only to the extent permitted by the law,
including   the   conflict   of   laws  rules,  so
specified:
    Rights  of  creditors   against   sold  goods.
Section 42a-2-402.
    Applicability of the  article on bank deposits
and collections. Section 42a-4-102.
    Governing  law  in   the   article   on  funds
transfers. Section 42a-4a-507.
    Letters of credit. Section 42a-5-116.
    Applicability  of the  article  on  investment
securities. Section [42a-8-106] 10 OF THIS ACT.
    Perfection  provisions  of   the   article  on
secured transactions. Section 42a-9-103a.
    Sec.  66.  Subsection (a) of section 42a-4-104
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    (a)   In  this  article,  unless  the  context
otherwise  requires:  (1)  "Account"   means   any
deposit or credit account with a bank, including a
demand, time, savings, passbook, share  draft,  or
like account, other than an account evidenced by a
certificate of deposit; (2) "afternoon" means  the
period  of  a  day  between noon and midnight; (3)
"banking day" means the part of a day on  which  a
bank  is  open  to  the  public  for  carrying  on
substantially all of its  banking  functions,  but
for  the  purpose of determining a bank's midnight
deadline, as defined in subdivision (10)  of  this
subsection,   shall   not  include  Saturday;  (4)
"clearinghouse" means an association of  banks  or
other   payors   regularly   clearing  items;  (5)
"customer" means a person having an account with a
bank  or  for  whom  a  bank has agreed to collect
items, including a bank that maintains an  account
at  another  bank; (6) "documentary draft" means a
draft to be presented for acceptance or payment if
specified  documents,  certificated securities, as
defined in section 42a-8-102, or instructions  for
uncertificated  securities,  as defined in section
[42a-8-308] 42a-8-102, AS AMENDED BY SECTION 2  OF
THIS  ACT,  or  other certificates, statements, or
the like are to be received by the drawee or other
payor  before  acceptance or payment of the draft;
(7) "draft" means a draft as  defined  in  section
42a-3-104  or  an  item, other than an instrument,
that is an order;  (8)  "drawee"  means  a  person
ordered  in  a  draft  to make payment; (9) "item"
means an instrument or a promise or order  to  pay
money handled by a bank for collection or payment.
The term does not include a payment order governed
by article 4A or a credit or debit card slip; (10)
"midnight deadline" with  respect  to  a  bank  is
midnight  on  its  next  banking day following the
banking day on which it receives the relevant item
or notice or from which the time for taking action
commences  to  run,  whichever  is   later;   (11)
"settle"  means  to  pay in cash, by clearinghouse
settlement,  in  a  charge   or   credit   or   by
remittance,  or  otherwise as agreed. A settlement
may be either provisional or final; (12) "suspends
payments" with respect to a bank means that it has
been  closed   by   order   of   the   supervisory
authorities,   that  a  public  officer  has  been
appointed to take it over, or that  it  ceases  or
refuses to make payments in the ordinary course of
business.
    Sec.  67.  (NEW)  (a) This act does not affect
an  action  or  proceeding  commenced  before  the
effective date of this act.
    (b)  If  a  security interest in a security is
perfected as of the effective date  of  this  act,
and  the action by which the security interest was
perfected would  suffice  to  perfect  a  security
interest  under  this  act,  no  further action is
required to continue  perfection.  If  a  security
interest  in  a  security  is  perfected as of the
effective date of this act but the action by which
the  security  interest  was  perfected  would not
suffice to perfect a security interests under this
act, the security interest remains perfected for a
period of four months after the effective date  of
this  act  and  continues  perfected thereafter if
appropriate action to perfect under  this  act  is
taken  within  that period. If a security interest
is perfected as of the effective date of this  act
and  the  security  interest  can  be perfected by
filing  under  this  act,  a  financing  statement
signed  by the secured party instead of the debtor
may  be  filed  within  that  period  to  continue
perfection or thereafter to perfect.
    Sec.  68.  Sections  42a-8-308  to  42a-8-321,
inclusive, and 42a-8-408 of the  general  statutes
are repealed.

Approved June 26, 1997