Rejections and Reclamations
A buyer may reject delivery from a seller if the securities are not in good delivery form.
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, and 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 or suffered a reduced credit rating or defaulted on a loan.
A buyer also has the right to demand the return of an already delivered security (reclamation) for many of the same reasons: a mutilated or irregular certificate, an improper assignment, a counterfeit or stolen security, rejection by the transfer agent. If a seller receives a returned security, the seller must provide the buyer with a certificate in good form or return the buyer’s money. All reclamations must be accompanied by a Uniform Reclamation Form and if this form is not attached, the receiver of