9.2.6. Rejection and Reclamation
Not every order that has been confirmed and cleared or even settled ends in a completed transaction. Good delivery may be disputed before or after a transaction has been settled. The Uniform Practice Code has established procedures to resolve disputed claims.
Rejection means that the purchaser refuses to accept securities that have been presented for delivery. Securities presented for delivery may be rejected if the securities are not in good delivery form. Legitimate reasons for rejections may include the following:
• The certificate was mutilated or had imperfections
• The delivery was made prior to the settlement date
• The security was not properly assigned
• The 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.
Reclamation means the return by the purchaser of securities previously accepted for delivery. Reclamation is permitted when information is discovered that, if it had been known at the time of delivery, would have prevented good delivery.
Either the receiving or delivering party may demand a reclamation if the security has not been delivered in good delivery form. When a seller receives a returned security, it must provide the buyer with a certificate in good form or return the buyer’s money.
The following is a list of time limits for reclamation:
• Reclamation due to a missing or mutilated coupon or to missing documents must be made within one business day following the date of delivery.
• Reclamation or demand for reclamation because an interest check accompanying a delivery was n