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Lawyers, policy advocates clash over proposed rollback of UCC Article 8 priority rules
Summary
A bill to restore pre‑1998 Uniform Commercial Code language on securities entitlement and creditor priority drew sharply divided testimony: some witnesses said the change would protect investors in systemic failures, while bankers and UCC practitioners warned it would disrupt markets and reduce access to credit.
The Banking Committee heard competing expert views on a proposal to amend Connecticut’s Uniform Commercial Code (Article 8) to reverse a 1990s revision that, critics say, prioritizes secured creditors in certain custodial control situations.
Proponents including David Webb and David Ice (testifying as private citizens with long finance‑sector experience) argued the 1994–98 revision enabled secured creditors to claim customer securities in complex insolvency scenarios and called the change “Armageddon planning” that favors big banks, not investors. They cited Lehman Brothers‑era disputes and said dematerialization of certificates shifted practical control of securities away from investors into long,…
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