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Stock Certificates, Lost, Stolen

Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates.

If your securities certificate is lost, accidentally destroyed, or stolen, you should immediately contact the transfer agent and request that a "stop transfer" be placed against the missing securities. Your broker may be able to assist you with this process.

The "stop transfer" helps to prevent someone from transferring ownership from your name to another's. The transfer agent or broker-dealer will report the certificates missing to the SEC's lost and stolen securities program.

If you are expecting a certificate through the mail, and it doesn't arrive, you should immediately contact the organization that arranged the transaction — typically your brokerage firm. While many companies choose to use registered or certified mail to deliver securities certificates to individuals, some prefer regular mail so as not to call attention to the potential value of the item.

Replacing securities certificates

You can get a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the following:

  1. The owner must state all the facts surrounding the loss in an affidavit;
  2. The owner must buy an indemnity bond to protect the corporation and the transfer agent against the possibility that the lost certificate may be presented later by an innocent purchaser. The bond usually costs between one or two percent of the current market value of your missing certificates; and
  3. The owner must request a new certificate before an innocent purchaser acquires it.

If you later find the missing certificate, you should notify whomever you called to place the "stop transfer" so that the lost or stolen securities report may be removed. Otherwise, you may have difficulty selling the securities.

We recommend that you keep a copy of both sides of your certificates in a place separate from the certificates themselves. If a certificate is lost or stolen and then transferred on the books of the transfer agent to another owner, it may be impossible for you to establish that you owned it because the transfer agent will no longer have a record of your name. But if you have a record of the certificate numbers, the transfer agent should be able to reconstruct when it was transferred and to whom.

Securities certificates are valuable and should be safeguarded. To avoid the cost and burden of safeguarding certificates, some investors opt for letting their brokerage firm or another company hold their securities for them. And increasingly, certificates for many securities are not even available: with these book entry securities, your ownership is reflected on the books of a company.

The actual transfer of securities is governed by state law, rather than the federal securities laws. The SEC seldom has any jurisdiction over these issues.

To further understand the functions of transfer agents in general, visit the website of the Securities Transfer Association, a private trade organization of transfer agents. The Securities Transfer Association, however, is not equipped to respond to individual inquires via the telephone, mail, or e-mail. Shareholders with transfer related inquiries, even if they are general in nature, would be best served by speaking to the transfer agent or issuer for the security in question or their broker-dealer.