Wisconsin Senate Bill SB123

Wisconsin 2025-2026 Regular Session

• Introduced: 3/14/25
• Refer: 3/14/25
• Failed: 3/23/26

Caption

An Act to repeal 408.110 (2) (a), (b), (c) and (d), 408.110 (5) and (6), 408.511 (2) and (3) and 409.305 (1) (c); to renumber and amend 408.110 (2) (intro.) and 408.511 (1); to amend 408.503 (1) of the statutes; Relating to: investment securities under the Uniform Commercial Code.

Summary

SB123 revises Wisconsin’s Uniform Commercial Code provisions governing investment securities held through brokers, banks, and clearing corporations, especially securities held in “street name” or in brokerage accounts rather than directly in the customer’s name. The bill changes which state’s law applies to disputes involving security entitlements: instead of the securities intermediary’s jurisdiction, the bill would make the entitlement holder’s jurisdiction control. It also removes several statutory provisions that currently address jurisdiction, adverse claims, and priority rules tied to the intermediary’s location and account records. The bill further strengthens the priority of entitlement holders over a securities intermediary’s creditors when the intermediary does not have enough of a particular financial asset to satisfy both customer entitlements and creditor claims. It repeals an existing exception that could give a creditor priority in certain circumstances, including where the intermediary is a clearing corporation, and it clarifies that interests in the underlying financial asset are held for entitlement holders and generally are not property of the intermediary or subject to its creditors’ claims, except as otherwise provided in the priority statute. The bill applies prospectively to security interests perfected on the effective date and takes effect on the first day of the fourth month after publication.

Impact

SB123 would amend several sections of Wisconsin’s UCC Article 8 and related provisions, including repealing portions of ss. 408.110, 408.511, and 409.305 and revising the rules for governing law, creditor priority, and the treatment of securities entitlements. In practical terms, it would shift legal control over many brokerage-account securities disputes from the intermediary’s jurisdiction to the customer’s jurisdiction and would alter priority outcomes in insolvency or creditor-conflict situations involving intermediated securities. The bill would affect securities intermediaries, broker-dealers, banks, clearing corporations, entitlement holders, secured creditors, and parties asserting adverse claims to financial assets.

Sentiment

The available context suggests the bill was introduced as a technical but substantive commercial-law update rather than a highly controversial measure. There are no committee transcripts or recorded votes provided, and the bill ultimately failed to pass pursuant to Senate Joint Resolution 1. Based on the text, the policy direction appears to favor customer/entitlement-holder protections and clearer jurisdictional rules, which may have been viewed positively by those concerned with investor rights and account-holder certainty.

Contention

The main points of contention are likely to have been the shift in governing law from the securities intermediary’s jurisdiction to the entitlement holder’s jurisdiction and the removal of exceptions that can favor a securities intermediary’s creditor, especially in clearing-corporation or margin-account contexts. Financial institutions, broker-dealers, and secured creditors may view the bill as reducing predictability or creditor protections, while customer advocates would likely support the stronger entitlement-holder priority and simpler jurisdiction rule. Because no debate transcript is available, these concerns are inferred from the statutory changes rather than from explicit recorded opposition.