Replacing Lost Or Stolen Securities Certificates

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What Are Securities Certificates?

Securities certificates are the written evidence of the ownership of shares of stock in, or an obligation to the bondholder by, a particular company. Certificates are valuable because they are negotiable instruments like checks drawn on a bank. Certificates are issued by the company, acting as its own transfer agent, or by an outside "transfer agent."

What If My Securities Certificates Are Lost Or Stolen?

If you discover that your securities certificate is lost, accidently destroyed, or stolen, you should immediately contact the transfer agent, or a broker-dealer and request that a "stop transfer" be placed against the missing securities. The "stop transfer" is an important step in protecting your ownership interest in a security and will prevent a person who improperly has possession of the certificate from having the ownership transferred to his or her name. In addition, the transfer agent or broker-dealer will notify the SEC's lost and stolen program of the missing, lost or stolen securities. This report reduces the likelihood that people can traffic in stolen securities because broker-dealers and banks can inquire whether securities presented for sale or as collateral for a loan are reported as missing, lost or stolen.

If you are expecting receipt of a certificate through the mail and it doesn't arrive, you should immediately contact the organization that arranged the transaction, typically your broker-dealer. While many transfer agents, banks, broker-dealers and corporations choose to use registered or certified mail to deliver stock certificates to individuals, there is no specific Federal requirement that they do so, and some prefer regular mail so as not to call attention to the potential value of the item. A certificate lost in the mail can usually be replaced without cost to the owner if the loss is reported promptly.

What Procedures Will I Have To Follow To Get New Certificates?

When a securities certificate belonging to a securityholder is lost, accidently destroyed, or stolen, the securityholder can obtain a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the owner of the lost certificate to satisfy several requirements:

What Is an Indemnity Bond?

The indemnity bond usually is an "open penalty" bond in which the owner of the lost certificate usually pays a premium for the bond, determined by the facts surrounding the lost and whether the securities were in registered or bearer form, and the bond does not protect the owner against losses incurred by the issuer or its transfer agent as a result of the original lost certificate

What Should I Do If I Find The Lost Securities Certificates After Reporting Them Lost?

In the event the missing certificate is later found or located, the investor should notify all parties concerned so that the "stop transfer" and the lost or stolen securities report may be removed. Otherwise, the investor will have difficulty selling the securities.

You should keep, at a minimum, a record of certificate numbers in a place separate from the certificates themselves. If a certificate is lost or stolen and subsequently transferred on the books of the transfer agent, it may be impossible for you even to establish possession at an earlier date because the transfer agent will no longer have a record of your name. If, however, you have a record of the certificate numbers the transfer agent should be able to ascertain when it was transferred and to whom.

Do I Need an Attorney For Replacing Lost Or Stolen Securities Certificates?

Replacing lost or stolen certificates can be an extremely costly and troublesome event at certain times. Consult an attorney immediately if you suspect foul play with your missing securities certificates. An attorney may also be useful in developing a trust or other effective place to hold your certificates.

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Last Modified: 09-29-2011 11:14 AM PDT

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