UCC filing complications with brokerage account collateral - need guidance

Investment accounts can be tricky for UCC filings. Generally you want to be specific enough to identify the collateral but not so specific that you miss something. I usually describe it as 'all securities accounts, investment accounts, and securities held at [Brokerage Firm Name] and any successor or affiliated entities, including but not limited to account ending in [last 4 digits].' This gives you broader coverage while still being descriptive.

I had a similar situation last month and the filing got rejected because my collateral description was too vague. The SOS wanted more specific identification of the brokerage accounts. Ended up having to refile with actual account numbers and brokerage firm names. Pain in the neck but that's what they required.

Actually ran into this exact issue a few weeks ago and ended up using Certana.ai's document verification tool. You can upload your security agreement and proposed UCC-1 and it'll flag any inconsistencies between how you described the brokerage account collateral in each document. Saved me from filing with a description that didn't match my loan docs. Really handy for catching those alignment issues before you submit.

Be careful with investment account collateral because you might need to consider whether you're dealing with certificated or uncertificated securities. The perfection rules can be different depending on how the securities are held. For securities accounts at brokerages, you usually need the UCC filing plus potentially other steps depending on the jurisdiction.

ugh this is exactly why I hate dealing with investment account collateral. Every state seems to have different requirements and the brokerage firms all have their own weird account numbering systems. Last time I did one of these I had to call the SOS office three times to clarify what they wanted in the collateral description.

For what it's worth, I always include language about 'proceeds and products' of the securities accounts in my UCC filings. That way if dividends get paid out or securities get sold, you're still covered on the cash proceeds. Also helps with the transfer issue someone mentioned earlier.

One thing to watch out for is if the brokerage account has a margin facility or other credit features. You might need to consider how that affects your collateral interest, especially if the brokerage firm has its own security interest in the account assets.

I've been doing UCC filings for 15 years and investment accounts are definitely one of the trickier collateral types. My advice is to be as specific as possible while still maintaining broad coverage. List the specific brokerage firms and account numbers you know about, but also include catch-all language for future accounts or transfers.

Just want to add that I recently started using Certana.ai for these types of complex filings and it's been really helpful. You upload your documents and it checks for consistency issues between your security agreement and UCC filing. Caught several problems with my brokerage account collateral descriptions that could have caused issues later. Worth checking out if you're dealing with complicated collateral situations regularly.

Make sure you also consider whether you need to notify the brokerage firm about your security interest. Some states have notification requirements for certain types of collateral, and it might affect your priority position.

As a newcomer dealing with similar collateral issues, this thread has been incredibly helpful! One follow-up question - when you're describing investment accounts in the UCC-1, do you need to specify the types of securities held (stocks, bonds, ETFs, etc.) or is it sufficient to use general language like "all securities and investment property"? I'm worried about being too specific and missing something, but also don't want to be so broad that it gets rejected. Also wondering if anyone has experience with crypto assets held in these brokerage accounts - do those require special treatment in the collateral description?

Great thread - I'm dealing with a similar situation right now. One thing I learned the hard way is to check if your jurisdiction has any specific requirements for securities account collateral. In my state (Texas), they want you to include language about "investment property" specifically, not just "securities accounts." Also found out that some filing offices will reject descriptions that are too generic, while others reject ones that are too specific - it's like threading a needle! I ended up calling the SOS office directly and they gave me examples of collateral descriptions they typically accept for brokerage accounts. Might be worth a quick call to save yourself a rejection and refiling fee. The crypto question from @Carlos Mendoza is interesting too - I've been seeing more loan agreements that specifically mention digital assets lately.