Protected Purchaser Law and Legal Definition

protected purchaser is a purchaser who has bought any certified or uncertified security and obtains the control of such security. Accordingly, a lender will be termed a protected purchaser if s/he gives value, obtains control of security and does not have notice of any adverse claim to the security. As a protected purchaser, s/he has a right to acquire a security interest in the debtor’s right in the collateral.

Following is an example of a federal statute defining 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) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.