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Unclaimed Property Activity Accelerates

Tuesday, May 26, 2020  
Posted by: Tanya Guy
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For most of the past year, states put many unclaimed property audits in the securities industry on hold. Litigation raised questions about the validity of several audit practices, leading states to pump the brakes on securities audits. Although those court cases are still in progress, states recently resumed examinations of companies handling securities.

Securities issuers and transfer agents have reason to be concern, as some recent audit practices are potentially problematic.

“Auditors are increasingly trying to ascertain issuer data under the guise of a transfer agent audit,” said Freda Pepper, counsel for ReedSmith LLP’s State Tax Group. “Recently, we’ve also seen auditors compromising their position on requesting full shareholder registrations.”

In addition, states have been retaining an expanded roster of auditors, some of which have little, if any, experience with unclaimed property.

“Some newer auditors don’t truly understand unclaimed property,” Pepper said. “It seems as though they are making unjustified document requests in an effort to learn the business. It is so important that holders understand their rights under the law versus what is being requested by an auditor.”

On top of recent litigation and audit trends, the COVID-19 pandemic has had an effect on unclaimed property. International mail restrictions affect companies’ ability to satisfy due diligence requirements and some states have loosened, adapted or adjusted their reporting deadlines and guidance.

With so much unclaimed property activity occurring in the securities industry, staying up to speed on these and other trends is essential for shareholder services professionals. To gain deeper insight into today’s unclaimed property environment, join Freda Pepper, along with Jen Borden from Borden Consulting Group and Will King from KPMG, for SSA’s Unclaimed Property Updates webinar at 2 p.m. EDT on June 4, 2020. Register today.