Transfer Agents and Escheatment
Escheatment is the process of returning lost or unclaimed property to state’s governments for safekeeping until the owner(s) is identified. Jurisdiction for the state is determined by last known address. Every state has laws regarding escheatment, who’s holding periods typically range around 5 years. The idea behind escheatment is that all property has a legally recognized owner. If the owner cannot be found in a timely manner, then the government is presumed to be the owner. Escheats are performed on what is called a ‘revocable basis’. This means if lost property is escheated to a state, then the original owner is found; the original escheat is revoked and ownership of the property returns to the rightful owner.
➜ Learn More: SEC Article
➜ Learn More: 17 CFR 240.17Ad-17
Lost Shareholders
Transfer Agents are obligated by the SEC to report to Commission (specifically to its designee; the SEC’s Securities Information System) anytime a certificate is known to be lost or missing for at least 2 days. Transfer Agents must search for the holder’s SSN or EIN utilizing an information database system, or if not available, exercise their best effort to match the holder’s name and address through these systems. All Transfer Agents must report all lost or missing certificates/shareholders on their own annual filings.
➜ Learn More: 17 CFR 240.17f-1