The bill amends the Uniform Commercial Code in Arkansas to clarify the priority among security interests and entitlement holders. Specifically, it revises Arkansas Code 4-8-503(a) to state that interests in a financial asset held by a securities intermediary are for the entitlement holders and are not subject to the intermediary's creditors, with the exception of provisions in 4-8-511. Additionally, it modifies 4-8-511 to establish that if a securities intermediary lacks sufficient interests in a financial asset to satisfy both entitlement holders and creditors, the entitlement holders' claims take precedence. It also introduces a requirement that any claims or causes of action by entitlement holders must be litigated in Arkansas.

Furthermore, the bill updates Arkansas Code 4-9-305(a) to clarify the governing laws for perfection and priority of security interests in investment property. It removes previous references to the local law of the securities intermediary's jurisdiction and emphasizes that the local law of the issuer's jurisdiction governs the relevant aspects of both certificated and uncertificated securities. The bill aims to streamline the legal framework surrounding security interests and enhance the clarity of rights and obligations for all parties involved.

Statutes affected:
HB 1659: 4-8-503(a), 4-8-511, 4-9-305(a)