Handling Lost Certificates

If a security is lost or stolen, the owner should immediately contact the transfer agent and request that a "stop transfer" be placed to prevent ownership from improperly transferring to someone else. If an investor was expecting certificates through the mail directly from the issuer, he should take the same steps if the certificates do not arrive when anticipated.

In either case, should the owner then locate lost certificates, he must contact the transfer agent again to remove the stop transfer. Otherwise, he may later find it difficult to sell the securities.
The transfer agent contacts the SEC's lost and stolen securities program to file a report. Or, if the customer uses a broker-dealer, he can contact them to see if they have a record of his purchase. If not, they will typically file notice with the SEC.

To have stock certificates reissued, the transfer agent and issuer require:
•    The owner must state the facts surrounding the loss in an affidavit
•    The owner must buy an indemnity bond to protect the corporation and the transfer agent against the possibility that the lost certificate may be presented later by an innocent purchaser
Usually costs between 2 or 35/0 of the market value of the missing certificates
•    The owner must request a new certificate before an innocent purchaser acquires it

The SEC's website recommends that investors with certificates make a photocopy of the front and back, keeping the copies separate from the originals. Without such a record, it is possible that someone could fraudulently transfer the securities on the transfer agent's books to another party without the owner's being able to prove they were ever his.

And, as we just saw, this can all be eliminated by using either direct registration or the street-name method.
If someone has reason to believe he owns stocks or bonds but has no records or broker-dealer to help prove it, the SEC informs investors of the escheatment process we looked at. There are several websites available to help such people or entities verify if they own securities held as abandoned accounts.


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