Protecting Investor Assets from Escheatment – Thank You STA!

U.S. public company  issuers should say a big ‘thank you” to the Securities Transfer Association  under the leadership of Charles (Charlie) Rossi, for playing a major role in  keeping states from grabbing shareholders’ property that is allegedly but not  actually “lost.”

The latest show-down was on April 4, 2012, when Rossi wrote  Delaware Governor Jack Markell.   That  strategic state in Corporate America was suggesting that direct deposit of  dividends did not represent “contact” with a shareholder, like the  shareholder’s cashing of a dividend check does – which could thus result in  that shareholder being considered “lost” and his/her property deemed  escheatable to the state of last known address (e.g., Delaware).   Rossi pointed out not only the absurdity of  this position, but also the fact that its inherent lack of due diligence flies  in the face of federal escheatment laws.

A month later Delaware’s Division of Revenue “clarified” their  position, saying shareholders who have their dividends directly deposited or  reinvested and do not have their 1099  returned as undeliverable are not considered lost.   Moreover, Delaware will consider contact or  activity in one security administered by a transfer agent as contact or  activity for any other security held by the shareholder with that transfer  agent.   Lastly, Delaware will accept a  Form W-8 received within three years from a foreign shareholder as sufficient  contact to avoid “lost” status.

Bottom line: Rossi and the STA are doing a great job helping protect the assets of investors held at American transfer agents, keeping otherwise vulnerable money out of too many unworthy hands.