                                 CODE OF VIRGINIA

PROPERTY INTEREST OF ENTITLEMENT HOLDER IN FINANCIAL ASSET HELD BY SECURITIES
INTERMEDIARY (§ 8.8A-503)

a. To the extent necessary for a securities intermediary to satisfy all security
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, except as otherwise provided in &#xA7; 8.8A-511.

b. An entitlement holder&#8217;s property interest with respect to a particular
financial asset under subsection (a) 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&#8217;s property interest with respect to a particular
financial asset under subsection (a) may be enforced against the securities
intermediary only by exercise of the entitlement holder&#8217;s rights under
&#xA7;&#xA7; 8.8A-505 through 8.8A-508.

d. An entitlement holder&#8217;s property interest with respect to a particular
financial asset under subsection (a) 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 &#xA7; 8.8A-504
   by transferring the financial asset or interest therein to the purchaser; and

   4. the purchaser is not protected under subsection (e). 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&#8217;s property interest with
respect to a particular financial asset under subsection (a), whether framed in
conversion, replevin, constructive trust, equitable lien, or other theory, may
not be asserted against any purchaser of a financial asset or interest therein
who gives value, obtains control, and does not act in collusion with the
securities intermediary in violating the securities intermediary&#8217;s
obligations under &#xA7; 8.8A-504.

HISTORY: 1996, c. 216.