Lost Security Holders: SEC Should Use Data to Evaluate Its 1997 Rule

United States. General Accounting Office.

United States. General Accounting Office.

关键词: Government accountability -- United States.;    financial markets and institutions;    lost security holders;    letter report;   

RP-ID  :  GAO-01-978
RP-ID  :  232706

美国|英语

来源: UNT Digital Library

【 摘 要 】

A letter report issued by the General Accounting Office with an abstract that begins "One in eight Americans are entitled to unclaimed and abandoned assets, according to the National Association of Unclaimed Property Administrators. These unclaimed and abandoned assets include savings and checking accounts, securities, paychecks, insurance settlements, and utility and rental deposits. Most of this money is unclaimed because the owner moved and simply forgot about the account, changed his or her name, or died. After a period of dormancy, the funds are turned over to state unclaimed property offices. To protect investors, the Securities and Exchange Commission (SEC) adopted a rule in 1997 requiring transfer agents to search for lost security holders, maintain written procedures for searching for lost security holders, and annually report to SEC on the accounts of lost security holders. However, the rule excluded the broker-dealers that are involved in the buying and selling of securities and that hold the vast majority of owners' assets. Legislation was introduced in Congress in 2000 that would have expanded the SEC rule to cover broker-dealers. GAO surveyed broker-dealer and transfer agents survey respondents and found that the number of lost accounts was about two percent of total accounts. Survey respondents said that they believe the number of lost security holders has remained steady since 1998. Transfer agents and broker-dealers said that the main reason for lost accounts was that owners forgot to send a change of address when they moved. Both transfer agents and broker-dealers generally resorted to telephone calls and mailings to locate lost security holders, using each method at least 75 percent of the time. Transfer agents and broker-dealers used credit bureaus and professional search firms the least and found these methods to be the least effective. About 40 percent of the responding transfer agents and broker-agents spent less than $10 trying to locate each lost customer. SEC has been unable to use data provided by transfer agents to assess the operation of the 1997 rule because of differences in the wayagents interpreted the questions. In addition, the requested information was insufficient for SEC staff to review the operation of the rule after three years as they were directed when the Commission adopted the rule. SEC relies primarily on its general inspections of transfer agents to ensure that these firms comply with the 1997 rule. SEC found violations in compliance with the 1997 rule's reporting and procedural requirements in about one quarter of the inspections it made between 1998 and 2000. Given that only transfer agents are covered by the 1997 rule, the extent of the lost security holder issue may be small."