Scripophily: Back With A Vengeance… Do You Know Where Your Old Stock Certificates Really Are? Should You Care?
Plus… Our Advice On Shareholder Records That Should Be Retained Forever
It’s been about ten years now since we last wrote about scripophily – the semi-secret, sometimes all-consuming and, all too often, totally illicit love for old stock certificates.
But two recent postings in the New York Times Store’s full page ads for Historical and Collectible items grabbed our attention: One was a Feb. 20 sale on “Vintage Stock Certificates: $230 (Standard Oil), $995 (American Express) $220 (Marconi Wireless). Authentic documents more than 100 years old.” And the other, on Jan 15th, which really caught our eye and spiked our interest - and the following series of questions - was for a “Scarce 1887 Standard Oil Stock Certificate Signed by J.D. Rockefeller…in black fountain pen” (sic) and nicely framed with a photo of the famously tight- fisted JDR….for an eye-popping $6500.
So…question number one: How did these items get into circulation in the first place?
Virtually all of them were, we are absolutely certain, purloined by once-trusted employees at ancient old-records-storage sites – or perhaps by simple passers-by, who spotted them, temporarily unattended, on their way to some other storage unit – or perhaps even to the crematorium when, prior to state and EPA clean-air standards, “cremation” was the universally prescribed way to dispose of such items - a process that also called for at least one, and sometimes two official witnesses to attest they personally observed their utter destruction. So much for those rules!
More important for corporate citizens to ask: What are the risks here?
Well, if you are Exxon Mobil, the main successor we think to Standard Oil, or your company is somehow an offshoot of Marconi Wireless – AND if the old certificates were routinely perforated, ideally with neat pinpricks that spell out “CANCELLED” – you can probably sleep comfortably. But a few years back we were approached by the holder of an old Wells Fargo stock certificate – which was once, and which was still theoretically exchangeable for American Express stock because it was NOT properly marked cancelled. Here, we encountered a horse of a different color: If deemed valid, as the holder insisted it should be (and American Express had no old records to prove it WAS exchanged, and cancelled on its books and records)…So OUCH! - American Express was theoretically on the hook to pay the holder several million dollars-worth of their greatly appreciated stock. Or alternatively, as the holder seemed to be hoping, to offer up a fat six-figure sum, so the holder would withdraw his lawsuit and go away. The holder asked for our expert opinion, and whether we would testify for him…but, much as we would have liked to have a nice fat check ourselves, based on a cut of the action, he was NOT a “holder in due course” in our opinion…but merely someone who’d gotten a nice flea-market item with fairly modest bit of value to a scripophilist. Clearly, the original shareholder, whose name was inscribed on the fetchingly collectible certificate had NOT assigned any security interest that they, or their heirs may have had, to our fleamarketeer.
So…should you think, “No worries”?
Sorry, but we’d have to say no: First off, it would be mighty embarrassing, for sure - and maybe even a career-ender - if you were the person in charge of the old stock certificates that suddenly appear in public marketplaces like the Times Store, or in flea-markets around the country. But on a much more serious note, IF any of the certificates appear to be in an un-cancelled state - and IF you can NOT lay hands on your old stock transfer journals, and/or written records of your “closed accounts” from your founding date forward, as many companies can not do - there IS a risk that a “finder” could trace the legal heir or heirs, make a demand for a replacement certificate, sell the new shares and agree to split the loot with the scripophilist.
What about having your company sell off old stock and bond certificates on its own?
Not entirely a bad idea in our book. The company would have to exercise some discretion - so as not to flood the market - and to cull out the oldest, most beautiful, best preserved and most grandly signed items, make sure they were indeed marked as cancelled, and then to certify that only X items remain in circulation in order to make the game worthwhile. And guess what? While we hesitate to reveal this little secret, many old certificates have even rarer and more beautiful “Stock Transfer Stamps” of assorted designs and denominations attached to their backs. We must confess that we often thought of detaching some, which had no value at all, other than as collectibles… for our own stamp collection …but we never did.