The rules grouped under FINRA Rule 11500 cover temporary certificates, mutilated securities, called securities, government-restricted securities and several categories of registration name. What do they have in common?

Each governs a security that may not be delivered at all until a restriction has been lifted

Each addresses a departure from the standard case the general delivery provisions assume

Each governs a security that must be delivered in physical rather than book-entry form

Each imposes a documentation requirement additional to those the general delivery rules impose

A security can be delivered under the general provisions of the 11300 subsection without any special treatment. Which set of properties describes such a security?

In good regular form, properly registered or in bearer form, depository eligible, free of special characteristics

Issued by a corporation, rather than by a partnership or by a governmental body of any kind

Held in book-entry form at a depository, having never existed as a physical certificate at all

Traded in the secondary market since its issuance without any intervening corporate action of any kind

FINRA Rule 11570, Certificates in Various Names, organises FINRA Rules 11571 through 11574 beneath it while itself sitting inside the 11500 subsection. What does that structure make it?

The sole point at which the subsection's numbering departs from increments of ten

A series marker within another, repeating the units of delivery cluster's structure

The only rule of the subsection that carries both operative text and organised entries

The first rule of the subsection to be added after the subsection was originally adopted

FINRA Rule 11100 and FINRA Rule 11500 each head one of the larger subsections of the Uniform Practice Code. How does the ground the former covers relate to the ground the latter covers across the life of a transaction between members?

In sequence: the former governs the comparison and confirmation of a trade; the latter governs its payment and the transfer taxes due on it

At opposite ends: the latter settles at the outset which restricted securities the Code covers; the former governs their final close-out

At opposite ends: the former sorts out scope, definitions and contingencies before delivery; the latter governs special cases at the delivery stage

At the same stage: the former sets the delivery rules for ordinary securities; the latter sets the delivery rules for restricted ones

FINRA Rule 11100 and FINRA Rule 11500 each head one of the larger subsections of the Uniform Practice Code, while other subsections of the Code hold as few as one or two rules. What may account for the size of those two subsections?

The large subsections reach every type of security, where each smaller subsection reaches only a few types and so has needed fewer rules

The large subsections carry most of the Code's deadlines, and each deadline has needed a rule of its own to set it out

The large subsections have been amended far more often, each amendment adding a new rule to the subsection rather than revising an existing one

The ground each large subsection covers throws up a wide variety of circumstances, each calling for its own narrowly focused rule

A seller delivers one hundred shares in a single certificate, meeting the units of delivery standard for stock, but the certificate has been badly torn. Does compliance with the units of delivery rules settle whether the delivery is acceptable?

No, those rules assume an undamaged certificate, and the effect of the damage is a matter for the provision on mutilated securities

Yes, the part delivery rule lets the buyer take the certificate and then reserve a claim for any loss that the damage later causes it

No, the units of delivery rules themselves set a standard of physical condition that a torn certificate fails to meet, whatever its denomination

Yes, a delivery made in the standard unit of delivery is acceptable whatever the physical condition of the certificate that is delivered to the buyer

Certificates registered in the name of a corporation, a firm, a dissolved firm succeeded by a new firm, and a deceased person or trustee each have a rule of their own in the FINRA Rule 11570 cluster. Why does the Code treat each kind of name separately?

Each kind of name settles on its own date, the dates of delivery framework varying with the kind of holder registered

Each kind of name needs its own treatment, whether a document, a presumption or a guarantee, to transfer a certificate validly

Each kind of name takes the certificate outside the book-entry mandate for a reason peculiar to that kind of holder

Each kind of name is traded in a separate market whose own conventions the members dealing in it must follow

FINRA Rule 11310(g) excludes from the book-entry mandate a transaction in securities that are not on deposit at a depository and cannot be deposited before the applicable cut-off. How does that exclusion bear on the FINRA Rule 11500 subsection?

It overrides the subsection, requiring such securities to be deposited at a depository before any rule of the subsection can apply to their delivery

It has no bearing on the subsection, whose rules address only depository-eligible securities that are settled by book entry at a registered depository

It is a direct point of contact, the securities it leaves outside book entry presenting the physical-certificate circumstances the subsection addresses

It displaces the subsection, a transaction excluded from book entry falling outside the Uniform Practice Code altogether and so outside every one of its rules

A registered stock certificate is a temporary certificate, tendered at a time when permanent certificates for the issue are not yet available. It is registered to 'Robert Hale', and the assignment is signed 'Robt. Hale'. Is it a good delivery?

No — a temporary certificate is never a good delivery, whether or not permanent certificates are yet available

Yes — a temporary certificate stays good delivery until permanent certificates are available, which settles the tender

Yes — an abbreviated first name is one of the variations the signature standard allows to be written either way

No — the signature must match the registered name in every particular, and shortening the first name is a change

An entire bond issue has been called for redemption. A foreign government with jurisdiction over the bonds requires a clearance certificate for any transfer of them, and a seller tenders one of the bonds without it. Is the bond a good delivery?

No — the entire-issue exception deals with the call, while the government's required document must still accompany the bond

Yes — a clearance requirement lapses for bonds called for redemption, since the issuer is about to pay the holders off

No — a bond of a called issue is good delivery only where the parties dealt in it specifically as a called bond

Yes — once every bond of the issue has been called, a called bond is the form left and must be accepted as delivered

A certificate registered in the name of a corporation has been physically damaged, and it is delivered while the issuer's transfer books are open. The transfer agent authenticates it as a mutilated security. Does that authentication also meet the requirement that applies because of the corporate registration?

Yes — the corporate requirement applies only where some party other than the transfer agent has handled the certificate before it is delivered

No — authenticating the damaged certificate does not supply the 'Proper papers for transfer filed by assignor' statement the transfer agent must sign on the assignment

Yes — authentication by the transfer agent vouches for the certificate as a whole, and that serves every purpose the corporate registration requirement exists to serve

No — a mutilated certificate registered in a corporation's name cannot become a good delivery until the issuer has replaced it with a new certificate

An American Depositary Receipt is registered in the names of two individuals. Whose signatures does the assignment need for the receipt to be a good delivery?

Neither owner's, the depositary that issued the receipt executing every assignment of it on the holders' behalf

Whichever owners the usual conditions of the foreign market where the underlying shares principally trade require

Both registered owners', since depositary receipts are among the securities the foreign carve-out excepts from itself

Either owner's, since a receipt for a foreign issuer's shares is a Foreign Internal Security freed from the joint-signature paragraph

A seller executes a detached assignment for a single certificate of 500 shares. It appoints an attorney irrevocably with power of substitution and names the issuer, the issue and the certificate number, but gives the amount as '500'. Does it meet the requirements for a detached assignment?

Yes — numerals are the form the transfer agent records, and the amount needs writing in words only on the certificate itself

Yes — the certificate number identifies the certificate exactly, so the amount may be given in whichever form the seller prefers

No — a detached assignment must state the price paid for the shares as well as their amount, and this one omits it

No — the amount must be expressed in words as well as numerals, and '500' gives it in numerals without words

A firm receives a certificate on which its own name has been filled in as substitute attorney in a power of substitution, and it now sells the certificate on. What does FINRA Rule 11550(g) require of the firm?

It must execute a new power of substitution in blank itself, as the substitute attorney that was named

It must have its own signature on the power it received guaranteed by the transfer agent before the sale settles

It must obtain a fresh assignment from the registered owner, since a substitute attorney cannot pass the certificate on

It must fill in its buyer's name as a further substitute attorney on the power it received, leaving that power in place

The share amount in an assignment has been corrected. The owner who executed the assignment has signed an explanation of the correction on the original instrument, but nobody has guaranteed the correction. How does the correction stand?

The explanation meets the requirement for corrections, and a correction signed by the owner needs no guarantee of its own beyond the assignment's

The explanation meets the requirement for corrections, but the correction must also bear a guarantee of its own

The explanation falls short, since only the transfer agent may explain a correction, and the correction also needs a guarantee of its own

The explanation falls short, since only the transfer agent may explain a correction, but no separate guarantee of the correction is needed

A certificate of a domestic issuer is registered in the name of a domestic individual executor and assigned by that executor. The executor's signature is guaranteed by a guarantor that belongs to no exchange, and the transfer agent finds that guarantee acceptable. Is the certificate a good delivery on that guarantee?

Yes — an executor's assignment needs no guarantee at all, so any guarantee given goes beyond what the fiduciary provision requires

No — an assignment executed by an executor is never a good delivery, whatever guarantee accompanies the executor's signature

Yes — the fiduciary provision calls for the general guarantee standard, which asks only that the transfer agent accept the guarantee

No — the fiduciary provision requires an executor's signature to carry the guarantee of a member of a national securities exchange

A buyer presents a certificate for transfer into its own name. The transfer agent returns it because the seller's assignment fails the assignment requirements, and the buyer pays courier costs to send it back for correction and present it again. The transfer agent then charges for registering the certificate in the buyer's name. Who bears each cost?

The seller bears both, the whole sequence of costs flowing from the defective assignment it delivered to the buyer

The buyer bears the courier costs as the presenting party; the seller bears the transfer agent's charge for registering it

The buyer bears both, each cost arising from a transfer that the buyer itself chose to request from the agent

The seller bears the courier costs its failure caused; the buyer bears the transfer agent's charge for registering it

A certificate registered in the name of a university is delivered while the issuer's transfer books are open. Is it subject to the requirement FINRA Rule 11571(a) sets for certificates in a corporation's name?

Yes — a university's certificate is one in the name of an institution, which the requirement reaches alongside corporations

Yes, but only where the university is itself incorporated, the requirement reaching corporations and no other holders

No — the requirement reaches corporations and names with an official designation, and a university is neither of those

No — the rule's requirement applies only while the issuer's books are closed, and here the books are open

A stock has collapsed in value but still trades, at a fraction of a cent a share. A seller that cannot obtain the certificates wants to deliver a Letter of Indemnity under FINRA Rule 11530(b)'s provision for securities deemed worthless. May it?

No — a Letter of Indemnity may be delivered only where the issuer has filed for bankruptcy protection

No — a stock that still trades has a known market value, so it is not a security deemed worthless

Yes — any stock trading below one cent a share is deemed worthless once the seller certifies that price to the buyer

Yes — a price of a fraction of a cent is treated as no known market value, which brings the stock within the provision

Two members trade a depository eligible security. The seller holds a physical certificate that meets every good delivery condition of the FINRA Rule 11500 subsection and proposes to hand it over. How must the trade settle?

By delivery of the certificate, a certificate meeting every good delivery condition being acceptable in place of book entry

By either method at the seller's choice, the book-entry requirement applying only where no certificate is available

By book entry through a securities depository, the book-entry requirement superseding any inconsistent rule of the Code

By delivery of the certificate, the certificate rules displacing the book-entry requirement for any security held in physical form

A coupon bond registerable as to principal is registered as to principal in an individual's name. The individual executes an assignment that meets every requirement of FINRA Rule 11550. Is the bond a good delivery?

No — registration to bearer is the condition for such a bond, and a conforming assignment does not stand in for it

Yes — a conforming assignment transfers the registered holder's interest, which is all a registered bond requires for good delivery

No — a coupon bond registerable as to principal may not be delivered at all until the issuer has redeemed its principal

Yes, provided the coupons still attached to the bond are complete and none of them has been canceled or mutilated

A certificate is registered in the names of a father and his infant daughter, and it is not registered under a Statutory Gifts to Minors Act. Both of them sign the assignment, and both signatures are guaranteed. Is the certificate a good delivery?

Yes — the father signs as her natural guardian as well as co-owner, which cures his daughter's want of capacity

No — one of the signatures is an infant's execution, and an assignment an infant executes defeats good delivery

Yes — the guarantee given for each signature vouches for both signers, and that is what makes the assignment good

No — a parent may not assign shares he holds jointly with his own child, so the father's signature is defeated

Shares of a Delaware corporation are registered in the names of two domestic individuals as trustees under an inter vivos trust. One trustee signs the assignment and has her signature guaranteed; the other trustee does not sign. Is the certificate a good delivery?

Yes, provided the signing trustee attaches the trust instrument showing that she has authority to act alone for both of the trustees

Yes — trustee executions are restored to good delivery for a domestic issuer's shares, and the signing trustee's signature has been guaranteed

No — the restoration for trustee executions leaves standing the rule that every registered owner of a joint registration must sign

No — the restoration reaches testamentary trustees only, so an inter vivos trustee's execution is never a good delivery of a domestic issuer's shares

Two members contract for 1,000 shares at $1.50 a share. After the contract the securities are deemed worthless, and the seller delivers a Letter of Indemnity with the documentation the worthless-securities rule requires. What may the seller require of the buyer?

The $1,500 contract price, payable on delivery of the letter by a form such as a cashier's check

The $1,500 contract price, but payable only once the physical certificates have been obtained and delivered to the buyer

A sum the parties renegotiate in light of the worthless determination, paid in cash upon delivery of the letter

A sum the parties renegotiate in light of the worthless determination, paid once the physical certificates have finally arrived

An Eastern member's bid, left with a Western member, stays open until the Western member's business day closes. The Western member accepts on a Monday, and word of the acceptance only gets to the Eastern member on Tuesday, the day the securities are deemed worthless. Every condition of the worthless-securities delivery other than its timing is met. May the Western member, as seller, deliver a Letter of Indemnity?

No — the trade dates from the Tuesday, when the acceptance arrived, so the securities were not deemed worthless after it

Yes — the trade dates from the Monday acceptance, so the securities were deemed worthless after the original execution date

Yes — the trade dates from the Tuesday, and a determination made on the trade date itself counts as one after execution

No — the trade dates from the Monday, but a determination on the day the acceptance arrives cancels the contract rather than closing it out

Notice calling part of a bond issue is published. Afterwards two members trade bonds of that issue specifically as 'called bonds'. On the settlement date the seller tenders called bonds, in a form otherwise in order under the contract, and the buyer refuses them because a called bond is not a good delivery. No Uniform Reclamation Form is involved. What may the seller do?

Treat the contract as cancelled, a buyer being free to refuse any bond of an issue once a call is published

Nothing until the UPC Committee has ruled whether a called bond was a good delivery on that contract

Sell the bonds out, the buyer having failed to accept a delivery made in accordance with the contract

Re-tender uncalled bonds of the issue instead, since the buyer is entitled to bonds that no call has reached

An issuer has written privately to a selling member, and to nobody else, stating that its shares have no known market value. The seller cannot obtain the certificates it owes on a contract made before the letter. May it deliver a Letter of Indemnity under FINRA Rule 11530(b)?

No — a Letter of Indemnity is available only after the issuer's shares have been delisted by an exchange

Yes — the issuer's own statement that the shares have no value is the strongest evidence that they are deemed worthless

Yes, provided the seller sends the buyer a copy of the issuer's letter together with the Letter of Indemnity

No — the route opens where a public announcement or a publication of general circulation discloses the worthless status

How does the Uniform Practice Code time the reclamation of a domestic issuer's temporary stock certificate that was accepted after permanent certificates had become available, where the transfer agent exchanges temporary certificates for permanent ones without charge?

Within 45 days from the day of original delivery, because the Code allows a longer period for temporary certificates

Within 30 months after the settlement date, because the certificate cannot yet be transferred into the buyer's name

Within 15 days from the day of original delivery, because the certificate is exchangeable without charge for a good one

Within 15 days from the day the buyer discovers the defect, because the period runs only once the defect is known

FINRA Rule 11500 | Financial Regulation Courses

Delivery of Securities with Restrictions

SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES

FINRA Rule 11500 is the series-level marker for the fifth and largest major subsection of the Uniform Practice Code — the organizational designation grouping thirteen rules addressing the delivery of securities that present some form of restriction, irregularity, or special characteristic distinguishing them from the ordinary, unrestricted depository eligible securities that FINRA Rule 11310's book-entry settlement mandate addresses as the modern default. Its title — Delivery of Securities with Restrictions — identifies the subsection's unifying theme: each of the rules within FINRA Rule 11500 addresses a category of security or certificate that, for one reason or another, cannot simply be delivered through the standard book-entry and certificate-denomination frameworks of FINRA Rules 11310 through 11365 examined throughout this dictionary's coverage of the FINRA Rule 11300 subsection. FINRA Rule 11500 has no operative text.

Its FINRA.org page returns no rule text under The Rule tab, shows no amendment history, and lists no selected notices — only its thirteen organized entries: FINRA Rule 11510, Delivery of Temporary Certificates; FINRA Rule 11520, Delivery of Mutilated Securities; FINRA Rule 11530, Delivery of Securities Called for Redemption or Which Are Deemed Worthless; FINRA Rule 11540, Delivery Under Government Regulations; FINRA Rule 11550, Assignments and Powers of Substitution; Delivery of Registered Securities; FINRA Rule 11560, Certificate of Company Whose Transfer Books Are Closed; FINRA Rule 11570, Certificates in Various Names, itself a sub-marker organizing FINRA Rules 11571 through 11574; and FINRA Rule 11580, Transfer of Limited Partnership Securities, together with FINRA Rule 11581, Limited Partnership Transfer Forms.

FINRA Rule 11500 sits within the 11000 Uniform Practice Code as the fifth major subsection, positioned between FINRA Rule 11410 — the sole rule of the FINRA Rule 11400 Delivery of Securities with Draft Attached subsection — and FINRA Rule 11510, the first substantive rule of the FINRA Rule 11500 subsection itself.

The Unifying Theme: Categories of Securities That Do Not Fit the Standard Delivery Framework

FINRA Rule 11500's thirteen organized entries, considered together, reveal a coherent organizing logic — each addresses a category of security, certificate, or delivery circumstance that presents some departure from the standard case the FINRA Rule 11300 subsection's provisions assume. FINRA Rule 11310's book-entry settlement framework, FINRA Rule 11320's dates of delivery, FINRA Rule 11330's payment forms, FINRA Rule 11340's stamp taxes, FINRA Rule 11350's part delivery, and FINRA Rules 11360 through 11365's units of delivery all presuppose, at least implicitly, a relatively standard scenario — a security in good, regular form, properly registered or in proper bearer form, eligible for depository deposit, free of any special characteristic requiring distinct treatment.

FINRA Rule 11500's thirteen entries each address a departure from this standard scenario along a different dimension.

FINRA Rule 11510's temporary certificates address securities whose permanent certificates have not yet been issued. FINRA Rule 11520's mutilated securities address certificates that have been physically damaged. FINRA Rule 11530's called-for-redemption or worthless securities address bonds or other instruments whose status has changed due to redemption or worthlessness.

FINRA Rule 11540's delivery under government regulations addresses securities subject to governmental restriction. FINRA Rule 11550's assignments and powers of substitution address the specific documentation required for registered securities' transfer. FINRA Rule 11560's transfer-books-closed certificates address a restriction that arises when an issuer's transfer books are closed indefinitely for any reason. The FINRA Rule 11570 cluster — FINRA Rules 11571 through 11574 — addresses the various non-individual or special-status names in which certificates may be registered, each presenting requirements of its own for transfer, whether a document, a presumption or a guarantee. And FINRA Rules 11580 and 11581 address the transfer of limited partnership securities specifically — connecting directly back to FINRA Rule 11100(a)(5)'s exclusion of Direct Participation Program securities except as otherwise provided in this Code, examined in this dictionary's early entry on FINRA Rule 11100.

The Connection to FINRA Rule 11100(a)(5): Where "Except as Otherwise Provided" Becomes Operative

FINRA Rule 11500's inclusion of FINRA Rules 11580 and 11581 — addressing the transfer of limited partnership securities and the forms used for such transfers — provides this dictionary with its first opportunity to observe directly where FINRA Rule 11100(a)(5)'s except as otherwise provided in this Code language becomes operative. Recall that FINRA Rule 11100(a)(5) excludes transactions in Direct Participation Program securities as defined in FINRA Rule 2310 from the Uniform Practice Code's general scope, except as otherwise provided in this Code.

FINRA Rules 11580 and 11581, positioned within the FINRA Rule 11500 subsection's broader treatment of securities presenting special delivery characteristics, appear to represent precisely this except as otherwise provided expansion — bringing limited partnership securities, which would otherwise fall within FINRA Rule 11100(a)(5)'s general exclusion as Direct Participation Program securities, back within the Uniform Practice Code's coverage specifically for purposes of the transfer mechanics those two rules address. This placement makes sense thematically — limited partnership interests, as registered ownership interests in non-corporate entities, present transfer and assignment considerations that are conceptually related to, but distinct from, the assignment and registered-securities-transfer considerations FINRA Rule 11550 addresses for corporate registered securities, making the FINRA Rule 11500 subsection's broader theme of restricted or special-characteristic securities delivery a natural home for the limited-partnership-specific transfer framework.

The FINRA Rule 11570 Sub-Cluster: A Second Instance of the Series-Marker-Within-a-Series-Marker Pattern

FINRA Rule 11570's role as Certificates in Various Names — itself organizing FINRA Rules 11571 through 11574 as a sub-cluster within the broader FINRA Rule 11500 subsection — represents the second instance this dictionary has encountered of a series-marker-within-a-series-marker structure, the first being FINRA Rule 11360's role within FINRA Rule 11300 as the marker for the units of delivery cluster (FINRA Rules 11360 through 11365).

The four rules FINRA Rule 11570 organizes — FINRA Rule 11571, Certificate in Name of Corporation; FINRA Rule 11572, Certificate in Name of Firm; FINRA Rule 11573, Certificate in Name of Dissolved Firm Succeeded by New Firm; and FINRA Rule 11574, Certificate in Name of Deceased Person, Trustee, etc. — each address a distinct category of non-individual or special-status registration name in which a security certificate might be registered, with each category presenting its own specific treatment — a documentation requirement, a presumption, a successor's guarantee or a list of qualifying fiduciaries — for effecting a valid transfer of a certificate registered in that particular kind of name. A certificate registered in the name of a corporation presents different transfer documentation considerations than one registered in the name of a partnership or unincorporated firm (FINRA Rule 11572), which in turn differs from a certificate registered in the name of a firm that has since dissolved with a successor firm taking its place (FINRA Rule 11573), which again differs from a certificate registered in the name of an individual who has since died, or in the name of a trustee in their fiduciary capacity (FINRA Rule 11574).

This four-rule cluster's position within the broader FINRA Rule 11500 subsection — following FINRA Rule 11560's transfer-books-closed provision and preceding FINRA Rules 11580 and 11581's limited partnership transfer framework — situates it within the subsection's broader theme of registered-securities transfer documentation, complementing FINRA Rule 11550's general assignments and powers of substitution framework with category-specific provisions addressing the various non-individual or special-status names in which registration might occur.

FINRA Rule 11500 as the Scale Counterpart to FINRA Rule 11100

FINRA Rule 11500's position as the largest subsection of the 11000 series by entry count — thirteen entries, against eleven listed beneath FINRA Rule 11100 and twelve beneath FINRA Rule 11800 — establishes it as a structural counterpart to FINRA Rule 11100 at the opposite end of the transaction lifecycle this dictionary has traced throughout its coverage of the Uniform Practice Code. FINRA Rule 11100 addressed the foundational scope, governance, definitions, contingent-contract, and ex-date frameworks that apply at the outset of a transaction's lifecycle — establishing what the Code covers and how various corporate-action-related timing questions are resolved before a transaction even reaches the delivery stage. FINRA Rule 11500, by contrast, addresses the delivery stage itself, but specifically for the wide range of special circumstances — temporary certificates, mutilated certificates, called or worthless securities, government-regulated securities, registered securities requiring assignment documentation, transfer-books-closed certificates, the four categories of non-individual registration names, and limited partnership securities — that depart from the standard delivery scenario FINRA Rule 11300's provisions address.

That both the foundational-scope subsection (FINRA Rule 11100) and the special-delivery-circumstances subsection (FINRA Rule 11500) are among the larger subsections within the entire 11000 series may reflect a common underlying reality — both the very beginning of a transaction's lifecycle (where scope, definitions, and contingencies must be sorted out) and the delivery stage's special cases (where a security's particular characteristics or status create departures from the standard delivery framework) are areas where the sheer variety of circumstances the Uniform Practice Code must address tends to generate a larger number of distinct, narrowly-focused rules than the more streamlined middle stages of the transaction lifecycle — the comparison and confirmation framework of FINRA Rule 11200's two rules, or the draft-attached delivery mechanism of FINRA Rule 11400's single rule — required.

Connection to FINRA Rules 11100, 11300, 11310, 11350, 11360, 11550, and 11580 Through 11581

FINRA Rule 11500 connects to FINRA Rule 11100(a)(5) — whose except as otherwise provided in this Code language is given concrete operative effect through FINRA Rules 11580 and 11581's limited partnership securities transfer framework, bringing Direct Participation Program securities back within Uniform Practice Code coverage for this specific purpose. It connects to FINRA Rule 11300 and FINRA Rule 11310's book-entry settlement mandate as the standard-case framework against which FINRA Rule 11500's thirteen special-circumstances rules each represent a departure or exception of some kind, with FINRA Rule 11310(g)'s exclusion for securities not on deposit at a depository representing a particularly direct point of contact between the standard book-entry framework and the kinds of physical-certificate-oriented circumstances FINRA Rule 11500's provisions address. It connects to FINRA Rule 11350's part delivery framework and FINRA Rule 11360's units of delivery cluster, both of which presuppose securities in standard, undamaged, properly-registered form — a presupposition that FINRA Rule 11520's mutilated securities provision and FINRA Rule 11570 cluster's various registration-name categories directly address as departures from. It connects to FINRA Rule 11360 as a structural parallel for the series-marker-within-a-series-marker pattern that FINRA Rule 11570 replicates for FINRA Rules 11571 through 11574. It connects to FINRA Rule 11550's assignments and powers of substitution framework as the general registered-securities-transfer provision that the FINRA Rule 11570 cluster's category-specific provisions complement. And it connects directly to FINRA Rules 11580 and 11581 as the limited partnership securities transfer rules whose inclusion within FINRA Rule 11500 represents the operative expansion of FINRA Rule 11100(a)(5)'s Direct Participation Program exclusion.

How the Subsection's Conditions Combine

Most of the substantive rules in the FINRA Rule 11500 subsection are framed in terms of good delivery, though not all of them. FINRA Rule 11510 says a temporary certificate "shall not be a good delivery when permanent certificates are available". FINRA Rule 11520(a) says a mutilated security "shall not be a good delivery until appropriately authenticated". FINRA Rule 11540(a) says a security subject to a governmental document requirement "shall not be a good delivery unless accompanied by the document or documents so required". FINRA Rule 11550(a) says a registered security, "to be a good delivery", must be accompanied by a conforming assignment. Each rule sets its own condition. A certificate that meets one of them has not thereby met the others that apply to it.

Consider a registered stock certificate that is a temporary certificate, tendered at a time when permanent certificates are not yet available. FINRA Rule 11510 does not stand in the way, because it withholds good delivery only when permanent certificates are available. But the certificate is registered to "Robert Hale" and the assignment is signed "Robt. Hale". FINRA Rule 11550(c) requires the signature to correspond with the name as written upon the certificate in every particular, without alteration or enlargement or any change whatever. The only variations it allows are "and" or "&", and "Company" or "Co.", written either way. The shortened first name is a change, so the certificate is not a good delivery.

Consider next a bond issue that has been called for redemption in its entirety, where a foreign government having jurisdiction requires a clearance certificate for any transfer of the bonds. FINRA Rule 11530(a) does not bar delivery, because its rule that a called certificate ceases to be a good delivery does not apply when an entire issue is called for redemption. A bond tendered without the clearance certificate is nonetheless not a good delivery, because FINRA Rule 11540(a) separately requires the document to accompany it.

The same holds where two cures come from the same office. A mutilated certificate registered in the name of a corporation, delivered while the issuer's transfer books are open, may be authenticated by the transfer agent under FINRA Rule 11520(a). That authentication does not supply the statement "Proper papers for transfer filed by assignor", which FINRA Rule 11571(a) requires to be placed on the assignment and signed by the transfer agent. The certificate needs both before it is a good delivery.

The Assignment Across Rules 11550 to 11574

FINRA Rule 11550(a) does not confine the required assignment to its own paragraphs. A registered security must be accompanied by an assignment, and a power of substitution where one is required, "conforming to the requirements set forth in Rule 11550 to 11574, inclusive". The registration-name rules of the FINRA Rule 11570 cluster are therefore part of what a conforming assignment means.

Suppose an assignment on a certificate corresponds exactly with the registered name, is guaranteed and has no alterations, but it was executed by an agent acting for the registered owner. FINRA Rule 11574(a) provides that a certificate shall not be a good delivery with an assignment or power of substitution executed by an agent. The assignment therefore does not conform to the requirements of Rules 11550 to 11574, and the certificate is not a good delivery, however fully the assignment meets the paragraphs of FINRA Rule 11550 itself.

Suppose next that a registered owner signs the assignment on her certificate and dies before the certificate is delivered. FINRA Rule 11574(a)(1) provides that a certificate shall not be a good delivery with an assignment executed by a person since deceased. The assignment was properly signed, but when the certificate is delivered its signer is a person since deceased, so the certificate is not a good delivery on that assignment.

The subsection's foreign carve-out has its own exceptions. FINRA Rule 11550(i) takes Foreign Internal Securities in registered form outside paragraphs (b) through (g) of FINRA Rule 11550 and outside FINRA Rule 11572, but it excepts Canadian Securities, American Depositary Receipts, American Shares, New York Shares and similar securities. An American Depositary Receipt registered in the names of two individuals therefore remains subject to FINRA Rule 11550(e). It is a good delivery only if signed by both registered owners, and an assignment signed by one of them is not enough.

Detached Assignments and Powers of Substitution

An assignment may be executed on the certificate itself or on a separate paper. Where it is on a separate paper, FINRA Rule 11550(b) requires a separate assignment for each certificate. A seller may deliver 400 shares in four certificates of 100 shares each, as FINRA Rule 11361(a)(2) permits for a contract in a multiple of 100 shares. It cannot then cover all four certificates with one detached assignment. Each certificate needs its own.

A detached assignment must itself carry the particulars FINRA Rule 11550(d) lists. These are provision for the irrevocable appointment of an attorney with power of substitution, and a full description of the security, including the name of the issuer, the issue, the certificate number, and the amount expressed in words and numerals. A detached assignment that gives the amount only as "500", without the amount in words, does not meet paragraph (d).

Powers of substitution let a certificate pass along a chain. Under FINRA Rule 11550(g), when an individual or firm has been named as attorney in an assignment, that attorney executes a power of substitution in blank. When a firm has in turn been named in a power of substitution as substitute attorney, a new power of substitution is to be executed in blank by that substitute attorney. So a firm that received a certificate with its own name filled in as substitute attorney, and now sells the certificate on, must itself execute a new power of substitution in blank. FINRA Rule 11550(a) makes a power required under paragraph (g) part of what a good delivery must be accompanied by.

Guarantees, Alterations and Who Pays

FINRA Rule 11550(f) requires any alteration or correction in an assignment or power of substitution to be accompanied by an explanation on the original instrument, signed by the person or firm executing it. FINRA Rule 11550(h) separately requires each assignment, endorsement, alteration and erasure to bear a guarantee acceptable to the transfer agent or registrar. The two requirements are separate. An assignment whose corrected share amount carries the owner's signed explanation, but no guarantee of the correction, meets paragraph (f) and fails paragraph (h).

The guarantee need not be of any particular kind. Paragraph (h) states that it is not its intent that a "New York," national securities exchange member or other specific guarantee is required, only that the guarantee be acceptable to the transfer agent. FINRA Rule 11574(b) applies that standard to certain fiduciaries. A certificate of a domestic issuer registered in the name of a domestic individual executor, and assigned by that executor, is a good delivery if it is properly assigned and the signature is guaranteed pursuant to FINRA Rule 11550(h). A guarantee acceptable to the transfer agent, given by a guarantor that is not a member of any exchange, meets that requirement.

Two rules divide the costs. FINRA Rule 11550(a) provides that any expense incurred through failure of a seller to meet the assignment requirements shall be paid by the seller. FINRA Rule 11650 provides that the party at whose instance a transfer of securities is made shall pay all service charges of the transfer agent. Suppose a buyer presents a certificate for transfer into its own name, and the transfer agent returns it because the seller's assignment signature does not correspond with the registered name. The buyer pays courier costs to send it back for a corrected assignment and to present it again. Those courier costs were incurred through the seller's failure, so the seller pays them. The transfer agent's service charges for registering the certificate in the buyer's name are charges for a transfer made at the buyer's instance, so the buyer pays them.

Registration Names in Practice

FINRA Rule 11571(a) reaches a certificate "in the name of a corporation or an institution, or in a name with official designation". While the issuer's transfer books are open, such a certificate is a good delivery only if the statement "Proper papers for transfer filed by assignor" is placed on the assignment and signed by the transfer agent. A certificate registered in the name of a university is a certificate in the name of an institution. It needs that statement just as a corporation's certificate does.

FINRA Rule 11572 decides how a firm or business name is read: "Unless the endorsement specifies otherwise, there shall be a presumption that stock registered in a firm or business name is registered in the name of a partnership and not a corporation." Stock registered in the name "Hale & Weston", with no endorsement saying otherwise, is presumed to stand in a partnership's name. It is therefore not treated as a certificate in the name of a corporation under FINRA Rule 11571.

FINRA Rule 11573 deals with a firm that has dissolved. A certificate with an assignment executed in the name of a firm that has since dissolved, and that is succeeded by a firm or firms having as general partners one or more of the general partners of the dissolved firm, is a good delivery only if the new firm or one of the new firms has signed the statement "Execution Guaranteed". That statement must be dated after the formation of the new firm that signs it. Suppose Birch & Carlow dissolves and two firms succeed it: Birch & Co., with Birch as a general partner, and Carlow Partners, with Carlow as a general partner. An assignment executed in the name of Birch & Carlow is a good delivery if Carlow Partners alone signs "Execution Guaranteed", dated after Carlow Partners was formed. Birch & Co. need not sign as well.

Called and Worthless Securities in Practice

FINRA Rule 11530(a) provides that a certificate of stock or a bond ceases to be a good delivery upon publication of notice of call for redemption. There are two exceptions: when an entire issue is called for redemption, and against transactions in "called stock" or "called bonds" dealt in specifically as such. The rule looks to when the notice was published, not to when the contract was made. Suppose members trade a bond on a Monday in an ordinary transaction. On the Tuesday the issuer publishes notice calling part of the issue for redemption, and the called bonds include that certificate. The seller tenders the certificate on the Wednesday. It is not a good delivery, even though the contract was made before the call.

FINRA Rule 11530(b) applies to securities deemed worthless. Paragraph (b)(3) defines them: "securities deemed worthless shall be those instruments which have no known market value". A stock that is still trading, even at a price of a fraction of a cent a share, has a known market value. It is not a security deemed worthless under paragraph (b), so paragraph (b)(1)'s provision for delivery by a Letter of Indemnity does not reach it.

Where paragraph (b) does apply, the delivery must show when the securities became worthless. Under paragraph (b)(2), a delivery under paragraph (b)(1) closes out the contract and must be accompanied by documentation evidencing that the security was deemed worthless after the original execution date of the contract. The contract is settled at the existing contract price. Suppose members contract on 3 March at $2 a share, and on 17 March a publication of general circulation discloses that the securities have been deemed worthless. A seller that delivers a Letter of Indemnity must accompany it with documentation showing that the securities were deemed worthless after 3 March, and the contract settles at $2 a share.

Where the Certificate Rules Meet the General Delivery Rules

FINRA Rule 11310(a) requires a member to use the facilities of a securities depository for the book-entry settlement of all transactions in depository eligible securities with another member. Where that requirement applies, the members settle by book entry. Handing over a physical certificate is not the way to settle, even a certificate that would meet every condition of the FINRA Rule 11500 subsection. FINRA Rule 11310(f) provides that the requirements of FINRA Rule 11310 supersede any inconsistent requirements under other rules in the Code.

Where certificates are delivered, the part delivery rule works alongside the good delivery rules. FINRA Rule 11350 provides that the purchaser shall be required to accept a part delivery on any contract due, provided the portion remaining undelivered is not an amount which includes an odd lot that was not part of the original transaction. Suppose a seller owes 300 shares on a due contract and tenders three certificates of 100 shares each. One of them is mutilated and has not been authenticated, so it is not a good delivery under FINRA Rule 11520(a). The buyer may refuse that certificate. It must accept the other two as a part delivery, because the 100 shares left undelivered include no odd lot.

Bond Certificates and Coupons

Bonds carry good delivery conditions of their own. FINRA Rule 11610(d) provides that a coupon bond registerable as to principal shall be a good delivery only if registered to bearer. Such a bond registered as to principal in an individual's name is not a good delivery. An assignment that conforms to FINRA Rule 11550 does not change that, because FINRA Rule 11610(d) makes registration to bearer the condition.

A mutilated or wrongly canceled coupon has its own cure, and the rule says who may give it. FINRA Rule 11520(b) requires an appropriate endorsement, in the form the Committee requires, on the reverse of a coupon mutilated as to the bond number or signature, or canceled in error. Paragraph (c) says who signs it: an officer of the obligor, or, under authorization from the obligor, a duly authorized officer or other authorized person of the corporate trustee or paying agent. A paying agent that endorses such a coupon on its own initiative, with no authorization from the obligor, has not given the endorsement paragraph (c) describes. The bond is not a good delivery on that endorsement.

Where the Code Itself Does Not Reach

The FINRA Rule 11500 subsection's rules apply only to transactions within the Uniform Practice Code. FINRA Rule 11100(a) excludes several kinds of transaction, and FINRA Rule 11100(b) provides that the scope may be expanded or limited in any rule of the Code if specifically provided in it. One exclusion covers transactions between members that are compared, cleared or settled through the facilities of a registered clearing agency, "except to the extent that the rules of the clearing agency provide that rules of other organizations shall apply". Suppose two members compare, clear and settle a trade through a registered clearing agency whose rules make no such provision. The trade is outside the Code, so the good delivery conditions of the FINRA Rule 11500 subsection do not govern it as Code rules.

Another exclusion covers transactions in municipal securities as defined in Section 3(a)(29) of the Exchange Act. FINRA Rule 11520 makes no specific provision for municipal securities. So a trade between members in municipal coupon bonds, one of which bears a coupon canceled in error, is outside the Code, and FINRA Rule 11520(b) does not govern it as a Code rule.

A third exclusion covers transactions in Direct Participation Program securities as defined in FINRA Rule 2310, "except as otherwise provided in this Code". A limited partnership as defined in FINRA Rule 2310 is a direct participation program. The exclusion gives way where the Code otherwise provides, and FINRA Rule 11100(b) allows a rule to expand the scope if the rule specifically so provides. FINRA Rule 11520 makes no such provision. So where two members trade unlisted limited partnership interests represented by a certificate that has been mutilated, FINRA Rule 11520 does not bring that trade within the Code.

When a Tender Fails the Test: Rejection, Reclamation and Draft Shipments

FINRA Rule 11710(a) distinguishes two ways of turning a security back. A "reclamation" is a claim for the right to return, or to demand the return of, a security which has been previously accepted. Securities which have been presented for delivery and which for a valid reason have been refused are deemed a rejection. Suppose a buyer is presented with a certificate of a company whose transfer books are closed indefinitely, and the certificate carries no ownership transfer indemnification, so it is not a good delivery under FINRA Rule 11560. A buyer that refuses it at presentation has made a rejection, not a reclamation.

Once a certificate has been accepted, the time for reclaiming it depends on the defect. FINRA Rule 11710(e) provides that reclamation because a form of certificate was delivered that was not a good delivery, but that is exchangeable without charge for a certificate that is a good delivery, shall be made within 15 days from the day of original delivery. Suppose a buyer accepts a temporary certificate of a domestic issuer's stock after permanent certificates have become available, and the transfer agent exchanges temporary certificates for permanent ones without charge. The temporary certificate was not a good delivery under FINRA Rule 11510, and it is exchangeable without charge for one that is. The buyer's reclamation must therefore be made within 15 days from the day of original delivery. FINRA Rule 11710(d) sets the same 15 days for an irregularity affecting only the currency of a security not issued under the jurisdiction of a foreign country.

Some defects surface only later, and a draft shipment does not shorten the time for them. FINRA Rule 11410(f) requires claims about such items as price, interest, protest fees or wire charges, arising from the acceptance of draft shipments in which irregularities exist, to be presented not later than ten days after payment. It then provides that this limitation shall not apply to matters covered under "Reclamations" in Rules 11710 to 11730. FINRA Rule 11720(b) allows reclamation, where a specific certificate tendered in settlement has been presented for transfer and the transfer agent has refused to transfer it, within 30 months after the settlement date of the contract. Suppose a buyer pays a draft for a certificate shipped with the draft attached, and five weeks later the transfer agent refuses to transfer that certificate. The ten-day limit does not bar the buyer's reclamation, which may be made within 30 months after the settlement date.

Registered Owners Who Cannot Give a Good Assignment

FINRA Rule 11550(e) provides that a certificate registered in the names of two or more individuals or firms shall be a good delivery only if signed by all the registered owners. FINRA Rule 11574(a) lists executions with which a certificate shall not be a good delivery, and one of them is an assignment or power of substitution executed by an infant. FINRA Rule 11574(c) provides that FINRA Rule 11574 does not apply to certificates registered under a Statutory Gifts to Minors Act.

Suppose a certificate is registered in the names of Paul Reyes and his infant daughter, Lucy Reyes, and it is not registered under a Statutory Gifts to Minors Act. If both of them sign the assignment, the assignment has been executed by an infant, and FINRA Rule 11574(a) withholds good delivery. If Paul Reyes signs alone, not all the registered owners have signed, and FINRA Rule 11550(e) withholds it. No combination of signatures by the registered owners makes the certificate a good delivery.

FINRA Rule 11574(b) restores good delivery for an assignment executed by domestic individual trustees under an inter vivos or testamentary trust. It applies only to securities of a domestic issuer, organized under the laws of any state in the United States or the District of Columbia, that are registered in the names of those fiduciaries. Certificates delivered under it must be properly assigned, and the signatures to the assignment must be guaranteed pursuant to FINRA Rule 11550(h).

Suppose shares of a Delaware corporation are registered in the names of Ann Lowe and Ben Cole as trustees under an inter vivos trust, and both are domestic individuals. Ann Lowe signs the assignment and her signature is guaranteed, but Ben Cole does not sign. The certificate is registered in the names of two individuals, so under FINRA Rule 11550(e) it is a good delivery only if signed by both of them. On Ann Lowe's signature alone it is not a good delivery.

Foreign Internal Securities and Government Documents

FINRA Rule 11550(i) takes Foreign Internal Securities in registered form, other than the securities it excepts, outside paragraphs (b) through (g) of FINRA Rule 11550 and outside FINRA Rule 11572. In default of specific Rules in the Code, the usual conditions of delivery and transfer in the foreign market where the security is principally traded apply. The paragraph names no other rule.

FINRA Rule 11540(a) is a specific rule of the Code on governmental documents, and it reaches any security. Where the laws or regulations of a government having jurisdiction require a license, clearance certificate, affidavit of ownership or similar document in connection with the transfer of a security, the security is not a good delivery unless accompanied by the document. Suppose a government with jurisdiction requires a clearance certificate for any transfer of a Foreign Internal Security in registered form that paragraph (i) reaches. Paragraphs (b) through (g) of FINRA Rule 11550 do not apply to that security. The clearance certificate must still accompany it, and without it the security is not a good delivery.

Worthless Securities: Payment and the Date of the Contract

Under FINRA Rule 11530(b)(1), in contracts for securities where a public announcement or publication of general circulation discloses that the securities have been deemed worthless, deliveries shall consist of the worthless securities or a Letter of Indemnity. A Letter of Indemnity is therefore a delivery on the contract. FINRA Rule 11330 gives the party making delivery the right to require the purchase money to be paid upon delivery by certified check, cashier's check, bank draft or cash, and FINRA Rule 11530(b)(2) provides that such contracts are settled at the existing contract price. Suppose two members contract for 1,000 shares at $1.50 a share, and after the contract the securities are publicly disclosed to have been deemed worthless. The seller delivers a Letter of Indemnity, with the documentation paragraph (b)(2) requires. It may require the purchase money of $1,500 to be paid upon that delivery by cashier's check.

Paragraph (b)(2) also requires documentation evidencing that the security was deemed worthless after the original execution date of the contract. For one kind of trade between time zones, the Code fixes its date. Under FINRA Rule 11120(g), where the bid or offer is accepted in a later time zone than that of the originator, the correct trade date is the day on which the dealer in the later time zone accepts the trade. FINRA Rule 11121 applies this to an Eastern dealer whose bid is accepted by a Western dealer on one day, with the acceptance reaching the Eastern dealer on the following day: the trade date is the day the Western dealer accepts.

Suppose an Eastern member leaves a bid with a Western member, good until the close of the Western member's business day. The Western member accepts on a Monday, and its acceptance reaches the Eastern member on the Tuesday. On the Tuesday the securities are deemed worthless, and a publication of general circulation discloses it. The trade date is the Monday. Taking the trade date as the original execution date of the contract, documentation showing that the securities were deemed worthless on the Tuesday shows that they were deemed worthless after the original execution date. The seller may deliver a Letter of Indemnity with that documentation. If the Tuesday, when the acceptance arrived, were the trade date, the securities would not have been deemed worthless after it, but that is not how the trade is dated.

When the Buyer Refuses a Good Delivery

A buyer that refuses a tender is not always right to do so. FINRA Rule 11530(a) provides that a certificate of stock or a bond ceases to be a good delivery upon publication of notice of call for redemption, except when an entire issue is called and except against transactions in "called stock" or "called bonds" dealt in specifically as such. FINRA Rule 11820(a) provides that, upon failure of the buyer to accept delivery in accordance with the terms of the contract, and lacking a properly executed Uniform Reclamation Form or the equivalent depository advice, the seller may, without notice, sell out in the best available market for the account and liability of the party in default.

Suppose that after notice calling part of a bond issue has been published, two members contract for bonds of the issue specifically as "called bonds". The seller tenders called bonds on the settlement date, in a form otherwise in order under the contract, and the buyer refuses them on the ground that a called bond is not a good delivery. The parties dealt in the bonds specifically as called bonds, so the exception in FINRA Rule 11530(a) applies and the tender is in accordance with the terms of the contract. The buyer has failed to accept delivery, and the seller may sell the bonds out, without notice, for the buyer's account and liability. FINRA Rule 11820(b) then requires the seller to notify the buyer, as promptly as possible on the day of execution, of the quantity sold and the price received.

Examination Relevance and Key Takeaways

FINRA Rule 11500 is tested on the Series 7 and Series 24 examinations as the series-level marker for the Uniform Practice Code's largest subsection — the framework addressing delivery of securities presenting restrictions, special characteristics, or registration circumstances that depart from the standard book-entry and certificate-denomination delivery framework of FINRA Rule 11300.

The key points to retain are these: FINRA Rule 11500 is the series-level marker for a thirteen-entry subsection — FINRA Rule 11510, Delivery of Temporary Certificates; FINRA Rule 11520, Delivery of Mutilated Securities; FINRA Rule 11530, Delivery of Securities Called for Redemption or Which Are Deemed Worthless; FINRA Rule 11540, Delivery Under Government Regulations; FINRA Rule 11550, Assignments and Powers of Substitution, Delivery of Registered Securities; FINRA Rule 11560, Certificate of Company Whose Transfer Books Are Closed; FINRA Rule 11570, Certificates in Various Names (itself a sub-marker for FINRA Rules 11571 through 11574, addressing certificates in the names of corporations, firms, dissolved firms succeeded by new firms, and deceased persons or trustees); and FINRA Rules 11580 and 11581, Transfer of Limited Partnership Securities and Limited Partnership Transfer Forms — with no operative text, no amendment history, and no selected notices of its own; the subsection's unifying theme is the delivery of securities presenting some restriction, irregularity, or special characteristic that distinguishes them from the standard, unrestricted depository eligible securities FINRA Rule 11310 addresses as the modern default; FINRA Rules 11580 and 11581's inclusion represents the concrete operative effect of FINRA Rule 11100(a)(5)'s except as otherwise provided in this Code language, bringing Direct Participation Program limited partnership securities back within Uniform Practice Code coverage for transfer purposes; FINRA Rule 11570's role as a sub-marker organizing FINRA Rules 11571 through 11574 replicates the series-marker-within-a-series-marker structure this dictionary previously encountered with FINRA Rule 11360 and the units of delivery cluster; and FINRA Rule 11500, with thirteen entries, is the largest subsection of the entire 11000 Uniform Practice Code, ahead of FINRA Rule 11800's twelve entries and FINRA Rule 11100's eleven.