Untitled Document

2015 Commercial Law Developments, Prepared by the Business Law Section Commercial Transactions Committee for the 2015 Business Law Section Annual Report
VIII. Letters of Credit, Investment Securities, and Documents of Title

A. Letters of Credit

B. Investment Securities

  • Citigroup Global Markets, Inc. v. KLCC Investments, LLC, 2015 WL 5853916 (S.D.N.Y. 2015) – A securities intermediary could not be liable for damages resulting from its refusal to complete a transfer requested by the secured party with whom it had a control agreement because the intermediary initiated an interpleader action when faced with competing claims to the assets credited to the account, and all the claimed damages therefore arise from acts that were within the intermediary’s rights granted by law.*

  • Amegy Bank v. Deutsche Bank Alex.Brown, 619 F. App’x 923 (11th Cir. 2015) – Sufficient evidence supported the jury’s verdict that a broker colluded with its customer to violate the rights of a secured party with a security interest in the customer’s stock, and hence was not shielded by UCC § 8-115 from liability for conversion, because there was evidence from which the jury could infer that the broker knew that the customer’s conduct – redeeming a partnership interest in exchange for stock in the corporate general partner and then immediately liquidating the stock – was an effort to violate the secured party’s rights and there was evidence that the broker provided substantial assistance to the debtor by setting up a margin account, personally picking up the certificate from the debtor’s office, selling the stock without reviewing the certificate, and wiring the proceeds to the debtor’s bank account the next day.

  • In re Appraisal of Dell, Inc., _ Del.Ch. _ 2015 WL 4313206 (2015) – Due to ministerial re-titling of stock through DTC system, beneficial owners weren’t ‘shareholders of record’ for purposes of corporate appraisal statute.

  • Harris v. TD Ameritrade, Inc., _ F.3d _ (6th Cir. 2015) – An entitlement holder does not have private remedy for a securities intermediary’s breach of its obligations under UCC §§ 8-504, 8-506, 8-507(a), and 8-508). Decision does not refer to UCC § 1-305(b) (‘Any right or obligation declared by [the UCC] is enforceable by action unless the provision declaring it specifies a different and limited effect.’)*

  • Knoll Capital Management L.P. v. Advaxis, Inc., 2016 WL _ (Del. Ch. January 29, 2016) – A potential buyer of corporate stock could not enforce an oral agreement with the issuer under Delaware corporate law. DCGL § 157. The absence of a written agreement and board approval was a “defective corporate act” under DGCL § 204 and could be ratified under Section 205. The court did not mention UCC § 8-113’s rule that the statute of frauds does not apply to agreements to sell securities.

IX. Contracts | Table of Contents