Escheaters Never Prosper

1

• (Es)cheaters Never Prosper
• (and other stories we have heard)
• Registrar and Transfer Company
• 2008 Client Conference
• June 2, 2008

2
WHEN IS ESCHEATMENT LIKELY TO HAPPEN?

• Correspondence sent to the address on file
  (address of record) is returned by the Post
  Office as Undeliverable (RPO). The account owner
  is then coded as lost. If you re-mail the item
  within 30 days of its first return, the
  shareholder only needs to be coded lost if the
  item is returned a second time as Undeliverable
  by the Post Office.
• Contact with the account owner is lost, and there
  are
• un-cashed checks.

3
SEARCHING FOR THE SHAREHOLDER

• SEC Rule 17Ad-17 obligates Transfer Agents to
  search, and tells them how
• Required composition of search database
• Required timing of searches
• Exclusions from the required searches
• The potential search gap

4
COMMON METHODS OFSHAREHOLDER CONTACT

• Cashing their checks
• Voting their proxy
• Sending written inquiry or instructions
• Tracking contact by the shareholder can be
  crucial in avoiding Escheatment

5
ESCHEATING ASSETS (Show Me the Money!)

• Process is driven by State laws (which can be
  different for each State)
• Due Diligence requirements
• The changing perspective of the States in
  recent years

6
WHO GETS THE MONEY?

• Montrone, Inc. is Incorporated in the State of
  Minnesota.
• Montrone, Inc. is Headquartered in the State of
  New Jersey.
• A majority of its Revenue and its Customers are
  located in Ohio.
• The lost shareholders Last Known Address was
  in Maine.
• The issuer of the Escheatable stock is
  Incorporated in Utah.

7
ESCHEATMENT STORIES CALIFORNIA DELAWARE

• California
• - Brief background
• - Current status
• - Future issues
• Delaware
• - An important source of State revenue
• - An employee claims Unclaimed
  Property as his own!

8
STATE UNCLAIMED PROPERTY AUDITS

• Why audits?
• Why me?
• Who does the auditing?
• What assets are they looking at?
• When (what time period) are they looking at?

9
KEY CURRENT UNCLAIMED PROPERTY ISSUES

• Dormancy Periods---they are still getting
  shorter!
• -Arizona, Oregon, South Carolina and Utah
• IRAs
• -When should they be deemed Escheatable?
• -What reporting is required?
• -Current audit situation
• Fraud Risk
• -Is there life after death for some
  account owner accounts?
• -Proactive look at new accounts

10
QUESTIONS AND ANSWERS

• Thank you for your time and attention.
• Enjoy the rest of the Conference!
• SMS VANACORE
• Nick Nichols
• 530 Fifth Avenue, 20th Floor
• New York, NY 10036
• 212-764-8666, ext. 142
• Nick.Nichols_at_smsvanacore.com
• Lennie Kaufman
• 1660 South Highway 100, Suite 500
• Minneapolis, MN 55416
• 952-697-4040
• Lennie.Kaufman_at_smsvanacore.com