Appropriations Committee backs changes to UCC Article 8 aimed at strengthening investor property claims; bankers warn of market disruption

The Appropriations Committee voted to advance Senate File 189, a bill that would revise state law interpretations of investment securities under Uniform Commercial Code Article 8 to clarify investors’ property claims against intermediaries and change certain priority rules in insolvency.

The bill’s presenters told the committee the 1994 revision to UCC Article 8 changed long-standing property terminology and converted many retail holdings into “security entitlements” recorded at intermediaries rather than direct share ownership. Don Grandy, an attorney representing True North Public Policy, described the change as undermining property rights and summarized the bill as a targeted restoration of entitlement-holder protections: “This change to the Uniform Commercial Code really flipped property terminology on its head,” he told the committee, and the bill “is intended to do is just restore those property rights.”

Justin Webb, who identified himself as a…