Replies to post #89478 on 8000 Incorporated (EIGH)

[janice shell]

CEDE has a cert for the stock you and everyone else hold in street name.

[lioncub]

IOUs are better than having EIGH shares, looks like those are worthless ;0)

[cmistocks]

Here is why June3Bug:
“The fact that a broker-dealer that is an NSCC member fails to receive securities that it purchased on behalf of a retail customer does not mean that the customer’s purchase is not completed until the member’s failure to receive is cured Under Article 8 of the Uniform Commercial Code, a securities broker-dealer may credit a customer’s account with a security even though that security has not yet been delivered to the broker-dealer’s account by NSCC. In that event, the customer receives what is defined under the Uniform Commercial Code as a “securities
entitlement,” which requires the broker-dealer to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the security. See UCC Sections 8-104, 8-501.”(emphasis added)
Note: Broker-dealers only receive “failure to receive” notices past the settlement cycle.
The SEC is clearly stating here that they have granted broker-dealers authority to redefine “security” past T+3 in customer accounts, from the definition in federal securities laws, to the definition in the UCC adopted by the states -when brokers do not receive the contracted for securities within T+3. The SEC goes on to explain in the Amicus that registered market participants act only as authorized by the SEC, and are prohibited from acting in contravention of such authority. The intentions of the SEC are thus clear and because the SEC relies on the UCC’s definition of security, we have christened this informal authorization the “UCC rule”. The only problem in this is that the UCC is a state-adopted authority, and is thus preempted by federal laws.
Public statement number 2
In Securities Exchange Act Release No. 56213 (August 07, 2007) (“Amendments to REG SHO”), the SEC tries to explain the SEC authority under which brokers can redefine “security” past T+3 in a rather creative way, which they are forced to do since there are no federal laws that can be quoted. However, the intent and signal to market participants and everyone else is clear:
“…, where a seller of securities fails to deliver securities on trade settlement date the seller unilaterally converts a securities contract (which should settle within the standard 3-day settlement period) into an undated futures-type contract, to which the buyer may not have agreed”
The main problem here is that the above is not defined in federal securities laws anywhere – there is nothing in federal securities laws that is even close.