The bill S.F. No. 2278 proposes amendments to sections of the Minnesota Uniform Commercial Code (UCC) related to securities intermediaries and investment property. The purpose of these amendments is to remove or alter certain provisions governing the rights, duties, and jurisdictional rules related to securities intermediaries and entitlement holders.

Key Changes Proposed:

1. Amendment to Section 336.8-110 (Choice of Law in Securities Transfers)

   • Specifies which jurisdiction’s law governs securities transactions.
     
   • Modifies how the issuer's and securities intermediary’s jurisdiction is determined.
     
   • Clarifies that jurisdiction is not determined by the physical location of financial assets or record-keeping facilities.

2. Amendment to Section 336.8-503 (Property Interest of Entitlement Holders)

   • Revises language to define the entitlement holder's property interest in financial assets held by a securities intermediary.
     
   • Clarifies that entitlement holders have a pro rata property interest in assets held by an intermediary.
     
   • Limits when an entitlement holder can enforce their rights against a purchaser of financial assets.
     

3. Amendment to Section 336.8-511 (Priority of Claims to Financial Assets)

   • Establishes that, in cases where a securities intermediary does not have enough assets to satisfy both entitlement holders and creditors:
     
     • Entitlement holders generally have priority, except when a creditor has control of a financial asset.
       
     • If a clearing corporation is involved, a secured creditor takes priority over entitlement holders.

4. Amendment to Section 336.9-305 (Perfection and Priority of Security Interests in Investment Property)

   • Alters rules on which jurisdiction’s law governs perfection, priority, and enforceability of security interests in investment property.
     
   • Removes references to governing law for certain securities accounts.
     
   • Specifies when the debtor’s location determines security interest priority.
     

Overall Impact:

• The bill modifies jurisdictional rules in the UCC to streamline securities transactions.
  
• It reinforces creditor protections in priority disputes with entitlement holders.
  
• It clarifies when and how property interests in financial assets can be asserted.
  
• The proposed changes could impact investment firms, banks, brokers, and securities intermediaries handling financial assets.
  

This bill seeks to modernize commercial code provisions governing securities transactions and asset ownership while ensuring clarity in creditor and entitlement holders’ rights.