Huge News On The Abandoned Property Front
As we just learned at the SSA conference in July, a sweeping re-draft of the so-called Uniform Abandoned Property Act has been approved, that would, among other things, call for state treasurers to wait at least three years before selling any “underlying securities” deemed abandoned… AND that would require them to return the full-value of the escheated shares, plus all accrued interest and dividends, to owners who come forward within six years of the escheatment date.
This would basically put a stop, once and for all, to all the lawsuits thanks to state seizures and sales of so-called abandoned property that have been plaguing public companies and their transfer agents.
The not-so-good news is that each state would have to adopt the new rules - and it’s not that likely that all will do so. AND… it seems likely that many will stick to their bad old ways…unless the Supreme Court stops them, which maybe they will …IF a good test case can be found. (The recent case that SCOTUS was asked to take up was ruled “too convoluted” although two justices noted what appear to be unconstitutional seizures of property by state treasurers.)
And ouch, there’s more bad news: As we noted in our last Special Supplement, a host of new “contingent auditors” of abandoned property are being hired by a host of “bad state treasurers” and they are “descending on public companies like flies on a big, fat, abandoned-property pie.”
Seems that most states now limit a single auditor to auditing no more than 50% of the “pie.” And since the “auditors” collect a cool 12% of the value of the monies obtained (which would create conflicts of interest for REAL auditors) they are relentless, and breeding like flies besides.