News & Press

SSA and STA Submit Joint Amicus Brief in Unclaimed Property Case

Fri, 7 Jun 2024 20:39:00 GMT

On May 29, 2024, Shareholder Services Association, in partnership with Securities Transfer Association, filed a joint amicus brief to the 11^th Circuit U.S. Court of Appeals in the case of Blake Warner v. Hillsborough County Clerk of Courts.

Parties with a vested interest in the outcome of a court case file such “friend of the court” briefs in support of one side or the other. As an association representing shareholder services professionals, SSA occasionally issues an amicus brief when a case could potentially affect its members.

The SSA/STA brief in this case was submitted in support of plaintiff Blake Warner. According to Warner, the Hillsborough County, Florida, government declared his property abandoned after insufficient attempts to notify him. The county allegedly published notice of its intent to escheat Warner’s court registry/escrow account in a non-English newspaper read by fewer than .5% of county residents and sent a due diligence letter to an outdated address despite having access to current contact information.

A district court dismissed the case in favor of Hillsborough Country, and Warner appealed. If the court decision stands, it could be problematic for issuers, transfer agents and shareholders.

Among the decision’s potential issues for securities issuers is a reference by the court to a 1982 case that said property could be considered abandoned if an owner fails to take reasonable actions imposed by law. There is no such requirement for owners to take action regarding securities, and long-term investors are encouraged by organizations such as AARP to adopt a “set it and forget it” mentality for their investments.

Imposing an inactivity standard could lead to securities being considered abandoned if an owner fails to respond to a due diligence letter or newspaper notice. This could result in financial loss for the owner whose property is escheated and liquidated. Because the state would not be required to compensate the shareholder for the loss of value under the court’s decision, shareholders incurring a loss would likely seek compensation from the issuer and transfer agent.

“Escheat laws serve a valuable function when used to reunite lost owners or their heirs with property that sits unclaimed,” the brief argues. “But when property is erroneously presumed unclaimed or abandoned, escheat laws do the opposite – they harm property owners… The upshot of this aggressive – and unconstitutional – approach is that plaintiffs like Mr. Warner, and shareholders like those amici support, are often left without adequate due process or just compensation, all in violation of bedrock principles of the U.S. Constitution.”

View the SSA/STA amicus brief.

SSA and STA Raise Concerns about Nevada AB 55

Thu, 15 Jun 2023 18:39:00 GMT

On June 1, 2023, Shareholder Services Association and the Securities Transfer Association submitted a letter to Nevada Gov. Joe Lombardo regarding the state’s recently enrolled AB 55. The bill aims to change the state’s Uniform Unclaimed Property Act. Unfortunately, the amended dormancy trigger for securities and the unclaimed property administrator’s ability to liquidate securities upon receipt without notice are problematic, according to SSA and SST.

“As currently drafted, AB 55 eviscerates essential protections for shareholders, frustrates federal law and raises serious constitutional concerns which have been repeatedly flagged by the United States Supreme Court,” the letter said.

Current Nevada law indicates that securities are presumed abandoned three years after the earlier of:

The date of the most recent dividend, stock split or other distribution unclaimed by the owner; or
The date of the second mailing of a statement of account or other notification or communication that was returned as undeliverable or after the holder discontinued mailings, notifications or communications to the owner.

This section is similar to language in the Uniform Law Commission’s Revised Uniform Unclaimed Property Act, which Nevada’s ULC commissioners supported.

AB 55 would amend the dormancy trigger for securities to presume securities “abandoned” three years after the owner’s last indication of interest in the property.

“This dormancy trigger, known as an ‘inactivity’ standard, is particularly problematic when applied to securities,” SSA and SST wrote. “By design, these assets are buy-and-hold investments intended to mature and hopefully increase in value for their owners. Any attempt to require ‘activity’ on property that is intentionally designed to be passive in order to prevent escheatment does not protect rightful owners.”

SSA and SST requested that Gov. Lombardo veto the bill. As of June 15, 2023, the governor had not taken action on the bill.

Read the SSA/SST letter.

West Virginia Provides Unclaimed Property Reporting Updates

Fri, 22 Apr 2022 14:20:00 GMT

To help property holders understand compliance and reporting changes resulting from the passage of H.B. 4511 in March 2022, the West Virginia Treasurer’s Office has issued the following guidance.

House Bill 4511, enacted by the West Virginia Legislature on March 12, 2022, made various changes to West Virginia's Uniform Unclaimed Property Act. This bill becomes effective June 10, 2022, and will therefore be in effect at the time of your next annual filing. A copy of the final version of the bill can be accessed at https://www.wvtreasury.com/House-Bill-4511.

Among other changes to modernize the law and increase accountability, the bill shortened the abandonment period for certain property types. A full list of our updated dormancy periods is available at https://www.wvtreasury.com/Updated-Dormancy-Periods.

Virtual Currency
Any virtual currency held or owing by an entity engaged in virtual currency business activity is presumed abandoned three years after the owner's last indication of interest in the property. When reporting virtual currency, the holder shall liquidate the virtual currency anytime within 30 days of filing the report and remit the property to the administrator. See, W. Va. Code §§ 36-8-2(a)(17); 36-8-8(e); 36-8-1.

Debt of a business association or financial organization
The bill reduced the abandonment period for debts of a business association or financial organization as set forth in W. Va. Code § 36-8-2(a)(4) from five years to three years.

Demand, savings, or time deposit
The bill modified the time frame set forth in W. Va. Code § 36-8-2(a)(5) to provide additional time for maturity of the asset before the asset must be reported to the administrator and the dormancy period for a demand, savings, or time deposit, including a deposit that is automatically renewable, five years after the maturity of the deposit.

Deposit or refund owed to a subscriber by a utility
The bill reduced the abandonment period for deposit or refund owed to a subscriber by a utility, as set forth in W. Va. Code § 36-8-2(a)(13) to one year after the deposit or refund becomes payable.

All funds held by a fiduciary
The bill reduced the abandonment period for all funds held by a fiduciary, as set forth in W. Va. Code § 36-8-2(a)(16) to three years after the principal maturity date.

Miscellaneous intangible property
The bill reduced the abandonment period for miscellaneous intangible property as set forth in W. Va. Code § 36-8-2(a)(18) from five years to three years.

Because the abandonment period for stock as set forth in W. Va. Code § 36-8-2(a)(3) remains at five years, the West Virginia State Treasurer's Office recognizes the complications that could arise from different abandonment periods for stock, and any cash dividends payable thereon.

Accordingly, as an executive policy, the West Virginia State Treasurer's Office will permit a holder to report cash dividends utilizing a five-year abandonment period. No interest or penalties will be assessed against a holder reporting cash dividends under this parameter.

Please note that this indefinite reporting extension applies only to cash dividends, and not to other types of securities-related cash or other types of miscellaneous intangible property.

For additional information regarding unclaimed property reporting, your business requirements, or to file a report, visit the WVSTO website at https://wv.findyourunclaimedproperty.com/app/reporting-guidelines. If you have additional questions, contact EholderSupport@wvsto.com.

What has the Pandemic Meant for the Shareholder Services Community?

Fri, 26 Jun 2020 17:03:09 GMT

The COVID-19 pandemic has disrupted nearly every aspect of life and affected every industry. Like so many others, the shareholder services community faced the immediate challenge of adapting to a work-from-home model. With little time for planning, professionals were faced with figuring out changes to their processes regarding handling physical mail, dealing with medallion guarantees and working with the Depository Trust Company.

Some firms sent everyone home and realized medallion guarantees were in the back office, causing initial panic and confusion. Fortunately, that concern was alleviated when the government deemed financial services as an industry with essential employees, ensuring they still had office access.

While the DTC shutdown of physical securities processing was a disruption, the higher volume of non-physical processing through the Direct Registration System wasn’t affected.

These and other challenges presented by the pandemic will likely continue to affect practices and procedures well beyond the immediate response to COVID-19.

Examine how the industry adjusted and dealt with pressing challenges and the long-term impact during SSA’s upcoming Legal and Regulatory Update webinar. This event will also include insight into virtual annual meetings and the SEC workgroup. Join Kevin Burns and Steven Gargalianos from Computershare and Katie Sevcik from Equiniti on July 9 at 2 p.m. EDT for this insightful discussion, moderated by Nicole Mauney from Duke Energy.

2019 State Legislative Sessions Off and Running

Wed, 20 Mar 2019 18:54:21 GMT

The 2019 state legislative sessions are clearly off and running at full speed, as evidenced by the number of bills being introduced impacting stocks and securities! SSA’s Legal and Regulatory committee is monitoring these bills and is working diligently to provide commentary as applicable. Working in collaboration with the Stock Transfer Agents Association (STA), the Unclaimed Property Professionals Organization (UPPO) and the unclaimed property Holders Coalition, the following letters have been signed by SSA addressing members’ concerns.

Arkansas HB1427: This bill includes a provision which allows the Administrator to liquidate unclaimed securities immediately upon receipt depriving unsuspecting shareholders of their property rights without just compensation. The provision prevents a shareholder from being able to take the steps necessary to recover the full value of his or her shares. This is because the shareholder’s claim is limited to the amount received from the sale of the shares, less expenses, even though the shares should not have been sold in the first instance.

Washington HB1179: The letter requests that HB 1179 be amended to address concerns that would “cause significant losses for shareholders”. It further points out sections that are clearly at odds with the Revised Uniform Unclaimed Property Act (RUUPA) as adopted by the ULC in July 2016.

Illinois Regulations: As a member of the Holders Coalition, SSA recently signed on to a joint Holders Coalition letter to Illinois. The Coalition had the opportunity to comment on the proposed rules seeking to implement the Illinois Revised Uniform Unclaimed Property Act (765 ILCS 1026) as adopted by the General Assembly through Public Acts 100-22 and 100-566.