Colorado § 4-8-303 - Protected purchaser.

§ 4-8-303. Protected purchaser.

(a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest therein, who:

(1) Gives value;

(2) Does not have notice of any adverse claim to the security; and

(3) Obtains control of the certificated or uncertificated security.

(b) A protected purchaser also acquires its interest in the security free of any adverse claim.

Source: L. 96: Entire article R&RE, p. 221, § 2, effective July 1. L. 2023: (b) amended, (SB 23-090), ch. 136, p. 539, § 41, effective August 7.

Editor's note: This section is similar to former §§ 4-8-302 and 4-8-311 as they existed prior to 1996.

ANNOTATION

Annotator's note. Since § 4-8-303 is similar to § 4-8-302 as it existed prior to the 1996 repeal and reenactment of this article, relevant cases construing that provision have been included in the annotations to this section.

Where evidence establishes that one had been informed that stock certificates were not validly issued before he accepted delivery, and that he had not acquired them for value and in good faith, he is not a bona fide purchaser. Folsom v. Sec. Nat'l Bank, 32 Colo. App. 91, 507 P.2d 1114 (1973).

Lenders were purchasers of security interest rather than bailees or holders of stock where stock owner voluntarily delivered and pledged stock as security for loans made to third parties and where lender gave value in exchange for pledge. Under the circumstances, lender was entitled to sell stock to recover losses upon third party default. Knappenberger v. Shea, 874 P.2d 498 (Colo. App. 1994).

Lenders were "bona fide purchasers" in absence of evidence that lender associated with or had notice of alleged fraud prior to completion of loan and stock transactions and in absence of evidence establishing unconscionability of stock pledge agreement. Knappenberger v. Shea, 874 P.2d 498 (Colo. App. 1994).

Lenders who were "bona fide purchasers" belonged to favored sub-class of purchasers who prevail against all other claimants in the exercise of security interest where stock pledge agreement specifically authorized lender to sell or transfer stock and retain profits in the event of loan default. Knappenberger v. Shea, 874 P.2d 498 (Colo. App. 1994).

A party requesting reissuance of a stock certificate cannot claim status as a purchaser for value. Am. Sec. Transfer, Inc. v. Pantheon Indus., Inc., 871 F. Supp. 400 (D. Colo. 1994).

Purchaser of limited tax bond was not a "protected purchaser" acquiring rights greater than the seller held because purchaser had prior notice of another's adverse claim. Meadow Homes Dev. Corp. v. Bowens, 211 P.3d 743 (Colo. App. 2009).