Series 99: 2.1.4.6 Rejections And Reclamations

Taken from our Series 99 Top-off Online Guide

2.1.4.6  Rejections and Reclamations

A buyer is permitted to reject delivery from a seller if the securities are not in good delivery form. Similarly, a seller has the right to reclaim securities that have been delivered and accepted. A buyer also has the right to demand the return of a previously accepted delivery.

Legitimate reasons for rejections may include the following:

  • The certificate was mutilated or had imperfections
  • Delivery was made prior to the settlement date
  • The security was not properly assigned
  • Delivery was not made in proper denominations.

Delivery cannot be rejected because of a deterioration in the market or because a company has gone bankrupt, suffered a reduced credit rating, or defaulted on a loan.

The return of an already delivered security is called a reclamation, and it may be reclaimed for these reasons:

  • Mutilated or irregular certificate
  • Improper assignment
  • Counterfeit or stolen security
  • Rejection by the issuer’s transfer agent

If a seller receives a returned security, the seller must provide the buyer with a certificate in good form or r

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