Think That Abandoned Property Is Not A Big Deal For You Or Your Company? Think Again
In March of this year, plaintiffs JLI INVEST S.A., and LIN INVEST S.A., filed suit in Massachussetts against Computershare Trust Company and related subsids, Idenix Pharmaceuticals, Merck and Co. and a Merck subsid – to recover $13 million of value the two Belgian owners of JLI and LIN Invest lost because their Idenix shares had been escheated to Delaware - under Delaware’s new definition of lost shareholders as being anyone who has not “made contact” with the company’s recordkeeping agent. Delaware sold the shares for cash, almost immediately thereafter, as they typically do - and shortly before a merger that would have produced $13 million more in value, that Delaware was, as always under such circumstances, unwilling to give back.
Let’s forget the fact for a moment that Delaware has no legal authority whatsoever to expropriate the property of shareholders in Belgium - except for a legal theory it seems to have cooked up on its own. And let’s reveal the fact that the two Belgians were, in fact, in frequent contact with Idenix - both as major investors and also as regularly paid consultants. But Delaware’s own narrow and self-serving definition about “contact” with shareholders doesn’t apply here…or so they say...And let’s note the fact that the “holder” of the property - Computershare in this case - would have had no way of knowing about any such “contact.”
Let’s also focus for a second on the fact that after Delaware went from a “lost standard” to an “inactivity standard” for escheatment their revenue from this source jumped by 77.3% - from $319,500,000 in 2012 to $566,500,000 in 2013. AND, above all, let’s note that only the tiniest fraction of the so-called ‘lost shareholders’ who have ‘abandoned’ their property under Delaware’s definition ever come forward to reclaim their property. So for Delaware, the $13 million is like a rounding error.
The most important fact to note, we think, is that the two shareholders, Computershare and Merck itself are already “losers” here - since they have had to hire expert attorneys, and waste lots of valuable time and energy to boot. So as mentioned above, let’s hope and pray the Supreme Court takes up the other pending case, this one re: California law - and does the right thing, as it did in the Horne case, to end unconstitutional “takings” of private property by moneygrubbing government agencies.
And readers…these two cases are only the tip of the iceberg where the risks of being a “holder” of abandoned property are concerned. Please go to the Articles section on our website to bone up - and to learn how you can protect yourself and your company from damages here.