A lost stock certificate could cause some big problems for your investment portfolio. Here are the steps you need to take to rectify the situation.
About 9.3 million corporate stocks are available for buying and selling on the New York Stock Exchange (NYSE). Thanks to technology, the vast majority of these transactions are done electronically, with people never physically seeing their stock ownership certificate.
This is a far cry from the origin of stocks in 1602 when the Dutch East India Co. issued the first paper shares. People would buy and sell physical certificates. It may be uncommon, but there are still paper versions of stock floating around.
There are several risks to having paper stocks, one of which is a lost stock certificate. This guide will help you know what to do should you lose proof of your investment.
The first reaction most people have once they realize they’ve lost stock is to panic. The truth is, you still own the stock. You will still receive notices and dividend payments.
The only time an issue arises is if you decide to sell. Then you’ll need the paper stock to sign them over to the buyer.
Contact the Company
Once you realize you’ve lost the stock, you should contact the company. You’ll probably need to speak to the investor relations department. They will tell you who the transfer agent is that manages the stock certificates.
Contact the Transfer Agent
You’ll need to contact the transfer agent to help you replace your stock certificates and officially record the original stock as missing. The transfer agent will contact the Securities and Exchange Commission (SEC) to inform them of missing stock.
For the transfer agency to help you, there are several things you’ll need to provide them with.
Affidavit of Lost Stock Certificate
This is a legal document that acts as your official statement pertaining to the loss of the certificates. It needs to include a detailed description of the stock, whether or not they were endorsed, the circumstances around the loss, and notarization.
You can read on here for more details in creating your affidavit. It’s smart to contact an attorney who can provide you with a suitable template or prepare this document for you.
The company and the transfer agency will want to protect themselves in the event that the lost stock gets redeemed at some point in the future. This means you’ll be required to buy an indemnity bond.
The rates can vary, but you’ll have to pay a percentage of the value of the stock certificates. You can purchase this bond through the transfer agency.
Pay the Fees
Paper stock certificates are uncommon these days, and it’s expensive to print and prepare these fancy documents. The total fees you’ll pay will vary and could be anywhere from $50 to $500.
Recover Your Lost Stock Certificate
A lost stock certificate can be a nerve-wracking experience, but it’s one you can easily rectify. Don’t panic; your investment is not lost forever. With a few documents, phone calls, and fees, you can report and replace your paper stocks.
Browse our other money focused articles for the best tips and tricks for managing your finances.