Colorado Code
Part 4 - Registration
§ 4-8-404. Wrongful Registration

Source: L. 96: Entire article R&RE, p. 226, § 2, effective July 1.
Editor's note: This section is similar to former §§ 4-8-311 and 4-8-404 as they existed prior to 1996.



Subsection (b) specifies the remedy for wrongful registration. Pre-Code cases established the registered owner's right to receive a new security where the issuer had wrongfully registered a transfer, but some cases also allowed the registered owner to elect between an equitable action to compel issue of a new security and an action for damages. Cf. Casper v. Kalt-Zimmers Mfg. Co., 159 Wis. 517, 149 N.W. 754 (1914). Article 8 does not allow such election. The true owner of a certificated security is required to take a new security except where an overissue would result and a similar security is not reasonably available for purchase. See Section 8-210. The true owner of an uncertificated security is entitled and required to take restoration of the records to their proper state, with a similar exception for overissue.
The rule of former Section 8-403 was anomalous inasmuch as Section 8-207 provides that the issuer is entitled to "treat the registered owner as the person exclusively entitled to vote, receive notifications, and otherwise exercise all the rights and powers of an owner." Under Section 8-207, the fact that a third person notifies the issuer of a claim does not preclude the issuer from treating the registered owner as the person entitled to the security. See Kerrigan v. American Orthodontics Corp., 960 F.2d 43 (7th Cir. 1992). The change made in the present version of Section 8-404 ensures that the rights of registered owners and the duties of issuers with respect to registration of transfer will be protected against third-party interference in the same fashion as other rights of registered ownership.
Definitional Cross References:
"Certificated security". Section 8-102(a)(4)
"Effective". Section 8-107
"Indorsement". Section 8-102(a)(11)
"Instruction". Section 8-102(a)(12)
"Issuer". Section 8-201
"Security". Section 8-102(a)(15)
"Uncertificated security". Section 8-102(a)(18)

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