KRS 355.8-511: Priority among security interests and entitlement holders.

(1) Except as otherwise provided in subsections (2) and (3) of this section, if a

securities intermediary does not have sufficient interests in a particular financial

asset to satisfy both its obligations to entitlement holders who have security

entitlements to that financial asset and its obligation to a creditor of the securities

intermediary who has a security interest in that financial asset, the claims of

entitlement holders, other than the creditor, have priority over the claim of the

creditor.

(2) A claim of a creditor of a securities intermediary who has a security interest in a

financial asset held by a securities intermediary has priority over claims of the

securities intermediary's entitlement holders who have security entitlements with

respect to that financial asset if the creditor has control over the financial asset.

(3) If a clearing corporation does not have sufficient financial assets to satisfy both its

obligations to entitlement holders who have security entitlements with respect to a

financial asset and its obligation to a creditor of the clearing corporation who has a

security interest in that financial asset, the claim of the creditor has priority over the

claims of entitlement holders.