N.Y. UCC Law § 8-202

Section 8--202. Issuer's Responsibility and Defenses; Notice of Defect\n or Defense.\n (a) Even against a purchaser for value and without notice, the terms\nof a certificated security include terms stated on the certificate and\nterms made part of the security by reference on the certificate to\nanother instrument, indenture, or document or to a constitution,\nstatute, ordinance, rule, regulation, order, or the like, to the extent\nthe terms referred to do not conflict with terms stated on the\ncertificate. A reference under this subsection does not of itself charge\na purchaser for value with notice of a defect going to the validity of\nthe security, even if the certificate expressly states that a person\naccepting it admits notice. The terms of an uncertificated security\ninclude those stated in any instrument, indenture, or document or in a\nconstitution, statute, ordinance, rule, regulation, order, or the like,\npursuant to which the security is issued.\n (b) The following rules apply if an issuer asserts that a security is\nnot valid:\n (1) A security other than one issued by a government or\n governmental subdivision, agency, or instrumentality, even\n though issued with a defect going to its validity, is valid\n in the hands of a purchaser for value and without notice of\n the particular defect unless the defect involves a violation\n of a constitutional provision. In that case, the security is\n valid in the hands of a purchaser for value and without\n notice of the defect, other than one who takes by original\n issue.\n (2) Paragraph (1) applies to an issuer that is a government or\n governmental subdivision, agency, or instrumentality only if\n there has been substantial compliance with the legal\n requirements governing the issue or the issuer has received a\n substantial consideration for the issue as a whole or for the\n particular security and a stated purpose of the issue is one\n for which the issuer has power to borrow money or issue the\n security.\n (c) Except as otherwise provided in Section 8--205, lack of\ngenuineness of a certificated security is a complete defense, even\nagainst a purchaser for value and without notice.\n (d) All other defenses of the issuer of a security, including\nnondelivery and conditional delivery of a security, are ineffective\nagainst a purchaser for value who has taken the security without notice\nof the particular defense.\n (e) This section does not affect the right of a party to cancel a\ncontract for a security "when, as and if issued" or "when distributed"\nin the event of a material change in the character of the security that\nis the subject of the contract or in the plan or arrangement pursuant to\nwhich the security is to be issued or distributed.\n (f) If a security is held by a securities intermediary against whom an\nentitlement holder has a security entitlement with respect to the\nsecurity, the issuer may not assert any defense that the issuer could\nnot assert if the entitlement holder held the security directly.\n