[Federal Register Volume 62, Number 194 (Tuesday, October 7, 1997)]
[Rules and Regulations]
[Pages 52229-52237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26519]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240 and 249
[Release No. 34-39176; File No. S7-21-96]
RIN 3235-AG99
Lost Securityholders
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission is adopting Rule 17Ad-
17 and Rule 17a-24 under the Securities Exchange Act of 1934. Rule
17Ad-17, which is designed to address the problem of ``lost
securityholders,'' requires transfer agents to conduct searches in an
effort to locate lost securityholders. Rule 17a-24, which is designed
to assist the Commission in monitoring the effects of Rule 17Ad-17,
requires transfer agents to file information on lost securityholders
with the Commission. The rules are designed to reduce the number of
lost securityholders.
EFFECTIVE DATE: Secs. 240.17Ad-17 and 240.17Ad-7(i) will be effective
December 8, 1997, and Secs. 240.17a-24 and 249b.102, the amendments to
Form TA-2 will be effective February 4, 1998.
FOR FURTHER INFORMATION CONTACT: Jerry W. Carpenter, Assistant
Director; Christine Sibille, Senior Counsel; Jeffrey Mooney, Attorney;
or Theodore Lazo, Attorney at 202/942-4187, Office of Risk Management
and Control, Mail Stop 5-1, Division of Market Regulation, Securities
and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
Transfer agents serve as the custodians of securityholder records,
including records of securityholders' addresses, for issuers. In this
capacity, transfer agents frequently are responsible for disseminating
shareholder communications and dividend and interest payments. For
various reasons, transfer agents occasionally have outdated or
incorrect addresses for some securityholders (``lost
securityholders'').\1\ As a result, these shareholders do not receive
dividend and interest payments to which they are entitled. Generally,
issuers retain custody of such dividend and interest payments, and if
contact is not reestablished with a securityholder prior to the
expiration of the appropriate state's escheat period, the issuer must
turn the securityholder's assets over to the state unclaimed property
administrator While various transfer agents attempt to locate lost
securityholders, the extent and type of efforts used very considerably
from one transfer agent to another.\2\ The Securities and Exchange
Commission (``Commission'') believes that establishing minimum search
requirements in this area will facilitate locating lost
securityholders.
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\1\ For example, some securityholders do not provide a new
address when they move.
\2\ See Securities Exchange Act Release No. 37595 (August 22,
1996), 61 FR 44249 (release proposing Rule 17Ad-17 and Rule 17a-24),
note 13 (discussing the methods transfer agents currently use to
locate lost securityholders).
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On August 22, 1996, the Commission issued for comment a release
(``Proposing Release'') \3\ proposing Rule 17Ad-17 \4\ and Rule 17a-24
\5\ under the Securities Exchange Act of 1934 (``Exchange Act'') and
proposing amendments to Rule 17Ad-7,\6\ which were designed to address
the problem of lost securityholders. Proposed Rule 17Ad-17 would
require that transfer agents exercise reasonable care, including
conducting data base searches, in an effort to locate lost
securityholders.\7\ The proposed amendment to Rule 17Ad-7 set forth the
retention time periods for the records relating to compliance with
proposed Rule 17Ad-17. Proposed Rule 17Ad-24 would have required
certain entities that hold assets for others (e.g., transfer agents and
broker-dealers) to file annually with the Commission a list of the
social security numbers of all lost securityholders contained in their
records. The Proposing Release also requested comment on whether either
the Commission or a private entity should create and operate a lost
securityholder data base.
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\3\ Id. The Commission later extended the comment period
contained in the Proposing Release. Securities Exchange Act Release
No. 37949 (November 15, 1996), 61 FR 59046 (extending comment
period).
\4\ 17 CFR 240.17Ad-17.
\5\ 17 CFR 240.17Ad-24.
\6\ 17 CFR 240.17Ad-7.
\7\ The Proposing Release also discussed transfer agents'
obligations under Rule 17Ad-10 to maintain and keep current accurate
master securityholder files (defined below in note 10), which
include information such as securityholders' names and addresses.
The Proposing Release concluded that maintaining accurate
securityholder files is one of the most basic steps in addressing
the lost securityholder problem. The Commission believes that
conducting data base search for lost securityholders pursuant to
Rule 17Ad-17 will enhance a transfer agent's fulfillment of its
responsibilities under Rule 17Ad-10.
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The Commission received 57 comment letters from 52 commenters in
response to the Proposing Release.\8\ The commenters in general
expressed support for proposed Rule 17Ad-17 although several commenters
expressed concerns about specific provisions of the proposed rule. The
commenters in general expressed concern about proposed Rule 17a-24. The
Commission is adopting Rule 17Ad-17 substantially as proposed but with
some modifications to reflect commenters' views and is amending Rule
17Ad-7 as proposed. The Commission is adopting proposed Rule 17a-24
with substantial revisions and is making related changes to Form TA-
2\9\ In addition, the Commission has directed its staff to review the
operations of the adopted rules after three years and to report back to
the Commission on its findings.
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\8\ The Commission received comment letters from eighteen
transfer agents, five trade associations representing transfer
agents, five individuals, three corporations, one broker-dealer, two
professional search firms, and eighteen government entities. A
summary of comments has beem prepared by the staff of the Division
of Market Regulation. The summary is included along with the comment
letters in Public File No. S7-21-96, which is available for
inspection and copying in the Commission's Public Reference Room,
450 Fifth Street, NW., Washington, DC 20549.
\9\ Form TA-2 is referenced in 17 CFR 249b.102.
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[[Page 52230]]
II. Discussion
A. Rule 17Ad-17: Obligation to Search
As adopted, Rule 17Ad-17 requires that transfer agents exercise
reasonable care to ascertain the correct addresses of all lost
securityholders in their records. At a minimum, transfer agents must
conduct two searches using an information data base. In addition,
transfer agents may not use any service designed to locate their lost
securityholders that results in a charge to a securityholder until
after the two data base searches have been conducted.
1. Definition of Lost Securityholders
Rule 17Ad-17 generally defines a ``lost securityholder'' as a
securityholder to whom an item of correspondence that was sent to the
securityholder at the address in the transfer agent's master
securityholder file has been returned as undeliverable.\10\ However, if
a transfer agent re-sends the returned item to the securityholder
within one month, the transfer agent has the option to delay
classifying the securityholder as lost for purposes of Rule 17Ad-17
until the item is again returned to the transfer agent as
undeliverable. If and when a transfer agent receives a new address for
a lost securityholder, either directly from the securityholder or
through the transfer agent's own efforts, the securityholder will no
longer be classified as lost.
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\10\ ``Master securityholder file'' is defined in Rule 17Ad-9(b)
as the official list of individual securityholder accounts.
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Under the definition as proposed, a securityholder would have been
classified as lost only after two separate items of correspondence
mailed at least three months apart had each been returned as
undeliverable. Commenters in general were opposed to a requirement that
three months elapse between the mailing of two undeliverable items of
correspondence, stating that this approach would increase costs by
requiring transfer agents to initiate new coding mechanisms.\11\ In
addition, some commenters stated that continuing to mail distributions
to an incorrect address increases risk of loss. Commenters also noted
that the proposed definition of lost securityholder could result in
long delays before some shareholders are defined as lost.\12\
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\11\ The Proposing Release noted that the three month period was
intended to give transfer agents time to receive any delayed change
of address notifications prior to having to conduct searches.
\12\ For example, if an issue does not pay dividends or
interest, the only securityholder correspondence may be the annual
report. In such an instance, a securityholder would not have been
classified as lost until a year after the first correspondence had
been returned as undeliverable.
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The Commission believes that the revised definition produces a more
consistent result as to when shareholders are classified as lost.\13\
In addition, the Commission understands that some transfer agents have
internal procedures whereby they promptly remail returned
correspondence because they have found such remailing procedures to be
beneficial in reducing the number of lost securityholders.\14\
Therefore, the revised definition gives transfer agents flexibility to
delay coding a securityholder as lost until after the remailed item is
returned as undeliverable.
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\13\ The revised definition avoids situations where
securityholders of issues with quarterly mailings would have been
defined as lost three months after a correspondence was first
returned as undeliverable while securityholders of issues with only
annual mailings would not have been defined as lost until a year
after a correspondence was first returned as undeliverable.
\14\ Transfer agents have found that some items are returned as
a result of the deliverer's error rather than an incorrect address
and that remailing will result in the securityholder receiving the
item.
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In addition, the Commission is making minor technical amendments to
the proposed definition of lost securityholder. For example, to take
into account future developments in the methods used to disseminate
shareholder communications, the rule no longer refers to returned
correspondence that were ``sent by first class mail.''
2. Transfer Agents' Search Requirements
a. Type of Search
Rule 17Ad-17 requires every recordkeeping transfer agent whose
master securityholder file includes accounts of lost securityholders to
search for such securityholders' current address using at least one
information data base. The transfer agent's search for a lost
securityholder must be based on the taxpayer identification number
(``TIN'') or on the name of the lost securityholder if a search based
on TIN is not reasonably likely to locate the lost securityholder.
As originally proposed, the search could be based on a
securityholder's name if such a search was reasonably likely to locate
the lost securityholder. Commenters were divided as to the advisability
of such provision. While most commenters agreed that TIN searches are
more effective, some commenters argued that transfer agents should have
the flexibility to search by name when advisable (e.g., when the TIN is
missing or incomplete). By revising the requirement to permit name
searches only when a TIN search is not reasonably likely to locate the
lost securityholder (e.g., when the TIN is missing or incomplete), the
Commission believes transfer agents are afforded sufficient flexibility
to conduct the most effective search.
b. Time Frames for Search
The rule as adopted also differs from the proposal with respect to
the time frames in which the searches must be conducted. As proposed, a
transfer agent would have had to conduct a search within three months
of a securityholder being classified as lost. If after the first search
the securityholder had continued to be classified as lost, the proposal
would have required another search between 12 and 18 months after the
initial search. Many commenters suggested that conducting an initial
search three months after a securityholder was classified as lost was
too soon for the data bases to be updated, and that conducting a second
search between 12 and 18 months after the first search was too long a
period from loss of contact.
As adopted, a transfer agent must conduct the initial search
between three and 12 months of a securityholder being classified as
lost.\15\-\16\ If the lost securityholder is not found, the
transfer agent must conduct a second search between six and 12 months
after the initial search.
Demonstrated below are time frames in which the second search would
need to be conducted depending upon when the first search occurred.
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\15\-\16\ As discussed in the Proposing Release, the
Commission encourages transfer agents to take immediate steps upon
learning a shareholder's address may not be correct. Proposing
Release, note 16. The Proposing Release discusses several techniques
that, while not required by the rule, may be beneficial in reducing
the number of lost securityholders for which the transfer agent must
search. Proposing Release, note 13.
[[Page 52231]]
Lost 3 mos. 9 mos. 12 mos. 15 mos. 18 mos. 21 mos. 24 mos.
(2) 1st Search
1st search at:
3 mos.
(2) 2d Search
6 mos.
(2) 2d Search
9 mos.
(2) 2d Search
12 mos.
(2) 2d Search
The second search is intended to take advantage of address changes that
may have been added to the data base after the initial search. The
transfer agent must conduct these searches without charge to a lost
securityholder.
Under the proposed rule, the time in which transfer agents would
have been required to conduct the first search would have depended on
the frequency of mailings associated with an issue. (The first search
would have had to be conducted between three and 15 months after the
return of the first correspondence based on whether the issue had
quarterly or annual mailings.) \17\
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\17\ Between three to 12 months would have elapsed between the
first and second returned items of correspondence, and the first
search would have had to be conducted within three months after the
return of the second item of correspondence.
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Because the timing of the search requirements would have been
dependent upon the frequency of issuers' mailings, commenters noted
that transfer agents would not have had much flexibility in determining
when to search for lost securityholders.
Under the adopted rule, the first search must be conducted between
three to 12 months after the first correspondence is returned. However,
unlike the proposed rule, transfer agents may search at any time during
this period. As a result, transfer agents' search requirements are
triggered within basically the same timeframes whether there are
quarterly or annual mailings, but transfer agents will be better able
to use their discretion as to the most appropriate time to conduct the
searches. Additionally, this revision may permit transfer agents to
conduct more cost-effective searches by allowing transfer agents to
bundle together many lost securityholders for submission to a data base
service which should lower internal costs and increase the likelihood
that transfer agents will qualify for volume discounts from data base
services.
c. Exceptions to the Search Requirement
In the Proposing Release, the Commission requested comment on
whether the requirement to search for lost securityholders should apply
only when a lost securityholder's account contained assets over some de
minimis amount.\18\ Many commenters agreed that transfer agents should
not be required to expend funds to search for a lost securityholder
when the cost of a search could exceed the amount in the
securityholder's account. Although varying de minimis amounts were
suggested, most commenters favored a de minimis threshold of $100 per
account.
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\18\ In calculating this amount, all assets in that account for
which the transfer agent maintains records are included regardless
of whether the transfer agent is actually in possession of the
property. Therefore, the value of the assets in the securityholder's
account includes dividends, interest, and other payments due to the
securityholder and the value of any underlying assets (e.g., the
value of securities owned by the shareholder as shown on the
transfer agent's records).
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The Commission believes that there should be a de minimis exception
from the search requirements that will allow transfer agents to forgo
searches that would not be cost-effective. Based on what the Commission
understands to be the low cost of data base searches,\19\ the
Commission is amending the proposed rule to permit transfer agents to
exclude from the search requirements any lost securityholder when the
value of all dividend, interest, and other payments due to the
securityholder plus the value of all assets listed in the lost
securityholder's account is less than $25. The Commission believes that
this exemption will reduce the economic impact of the rule on transfer
agents while still affording sufficient protection to
securityholders.\20\
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\19\ Refer to Section IV below for a discussion of the cost of
data base searches.
\20\ Some commenters stated that for efficiency reasons some
transfer agents will search for all lost securityholders.
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In the Proposing Release, the Commission noted that data base
searches generally are considered a cost-effective way to locate lost
securityholders. The Commission requested comment on the potential
effectiveness of the rule in addressing the lost securityholder issue.
The request was intended to elicit comment on situations where data
base searches would not be an appropriate method of locating lost
securityholders. One commenter requested that exemptions from the
search requirement be created for certain categories of securityholders
that will not be reached through an electronic data base search,
specifically any lost securityholder (1) whose last known address is
outside of the United States; (2) whose account has a missing or
incomplete TIN; (3) which is not a natural person (e.g., a
corporation); or (4) who is known to be deceased.
Based on this request and on additional research into the
capabilities of existing commercial data bases, the Commission has
decided to create an exemption from the search requirements for
securityholders for whom the transfer agent has received documentation
of their death \21\ and an exemption for securityholders which are not
natural persons. The Commission understands that the data bases relied
upon by most transfer agents do not contain information on estates or
heirs and that there is no automated method by which such information
can be obtained. \22\ Securityholders which are not natural persons
likewise cannot be located easily through the use of information data
bases and comprise a minuscule percentage of the total amount of lost
securityholders.
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\21\ Such documentation may consist of a report received from an
information data base.
\22\ The Commission has been informed that in the future some
information data bases may be updated to include beneficiary data.
If a low cost method of determining a deceased's beneficiary becomes
available, the Commission may reexamine the application of search
requirements to this category of securityholder.
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The Commission is not adopting the other suggested exemptions
because data base searches for those categories of lost securityholders
could in many cases be effective. For example, although the Commission
understands that most data bases currently do not contain the names of
individuals living outside of the United States, it is possible that a
securityholder with a foreign last known address was only temporarily
living out of the country and that a data base search will provide an
updated domestic address.
With respect to the commenter's request for an exemption for
securityholders with missing or incomplete TINs, the adopted rule
permits transfer agents to conduct a search based on a lost
securityholder's name when a search based on a TIN is not reasonably
likely to locate a lost
[[Page 52232]]
securityholder. Therefore, the Commission also believes that no
exemption should be created for accounts with missing TINs.
d. Assessment of Procedures
In the Proposing Release, the Commission requested comment on
whether the rule should include (1) a requirement that transfer agents
periodically assess the effectiveness and appropriateness of the search
procedures and technology they employ, and/or (2) a requirement that
transfer agents' search procedures meet a performance standard based on
success in locating lost securityholders. Most commenters that
addressed the issue generally did not support adopting a strict
application of this requirement. For example, some commenters believe
that transfer agents should not have an absolute requirement to locate
a certain percentage of their shareholders because the results of the
searches frequently were outside of their control. While the adopted
rule does not specifically contain such requirements, the Commission
believes that transfer agents should bear these concepts in mind in
determining whether they have met their obligation to exercise
reasonable care under Rule 17Ad-17(a). For example, if a transfer agent
is using a data base service that routinely fails to locate any or that
locates only a very small percentage of lost securityholders, the
transfer agent should evaluate whether the use of such service
constitutes the exercise of reasonable care.
3. Definition of Information Data Base
As proposed, Rule 17Ad-17 would have defined an information data
base as any automated data base service that (1) contains addresses of
U.S. residents, including addresses in the geographic area in which the
lost securityholder's last known address is located, (2) covers a
reasonably broad geographic area, (3) is indexed by TIN or by name, and
(4) is updated at least four times a year. The Commission has revised
the definition based on commenters' suggestions. The first requirement
has been revised to require that the data base contain addresses from
the entire United States. The second requirement has been revised to
require that the data base contain names of at least 50% of the U.S.
adult population. The third requirement also has been revised to
clarify that an information data base must be indexed by TINs if a TIN
search is used or by name if a name search is used. The fourth
requirement is adopted as proposed. The revisions are intended to
preclude the use of a data base that contains a small number of names
but covers a broad geographic area or one that contains a large number
of names but covers only a small geographic area.
The Commission also is adopting an alternative standard that will
provide flexibility to transfer agents in fulfilling their obligations
to search for lost securityholders. The alternative will permit
transfer agents to use any service to locate lost securityholders if
that service produces comparable results to the information data base
described above. As part of their obligation to maintain records
discussed below, a transfer agent relying on this alternative would be
required to develop written procedures documenting and describing the
alternative service used.
4. Use of Professional Search Firms
The Proposing Release discussed the current practice of some
transfer agents to use professional search firms that charge a lost
securityholder a fee for locating the lost securityholder's assets. As
proposed and as adopted, Rule 17Ad-17 will prohibit a transfer agent
from using any service to locate a securityholder that results in a
charge to the securityholder until after the two data base searches
required by the rule have been conducted. While a few commenters argued
against the proposed prohibition, many commenters supported the
provision with some arguing for additional restrictions.
Although the more extensive search techniques employed by
professional search firms may locate some securityholders that the data
base searches will not locate, the charges of such firms can cost a
securityholder a significant portion of his or her assets. The
Commission believes that transfer agents should make efforts (i.e., the
search provisions of Rule 17Ad-17(a)(1)) to locate lost securityholders
before permitting services to charge them for reuniting them with their
assets. Therefore, the Commission is adopting Rule 17Ad-17(a)(2) as
proposed to delay transfer agents' use of professional search firms
where the charge is assessed to the securityholder until after a
transfer agent has completed two searches under Rule 17Ad-17.\23\
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\23\ Because a professional search firm that charges a fee to
the transfer agent rather than to lost securityholders could qualify
as an information data base search under the rule, professional
search firms could be used to satisfy the transfer agent's search
obligation under Rule 17Ad-17.
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5. Verification of Securityholder
In order to guard against delivery of distributions to an incorrect
recipient, the Commission recommended in the Proposing Release that
transfer agents should verify that the person at the newly obtained
address is in fact its account holder before disbursing securities or
funds. One commenter expressed concern that requiring a transfer agent
to confirm a securityholder's identity may restrict the transfer
agent's ability to correct its master securityholder file because some
shareholders may fail to return verification forms. The language in the
Proposing Release was not intended to mandate a particular procedure.
Instead, it was intended to highlight the need for transfer agents to
use care prior to disbursement of securityholder funds. Prior to
disbursing funds or to updating their master securityholder files,
transfer agents should determine whether such action is appropriate
based on all relevant factors.
B. Rules 17Ad-7 and 17Ad-17: Recordkeeping Requirements
Rule 17Ad-17 requires that all recordkeeping transfer agents
maintain records to demonstrate their compliance with the requirements
under the rule. Paragraph (i) is being added to Exchange Act Rule 17Ad-
7 to require that transfer agents maintain the records required by Rule
17Ad-17 for a period of not less than three years and that transfer
agents maintain these records in an easily accessible place during the
first year.\24\
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\24\ Rule 17Ad-7 sets forth the lengths of time and the methods
by which transfer agents must maintain the records which they are
required to keep pursuant to Exchange Act Rules 17Ad-6, 17f-2, and
17Ad-17.
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In the Proposing Release, the Commission suggested that transfer
agents document the date each securityholder is classified as lost and
the date the data base searches are conducted. One commenter
interpreted this discussion to be a requirement that such dates be
recorded on each lost securityholder's individual account record. This
commenter stated that this requirement could require costly systems
upgrades and that transfer agents instead should be allowed to
demonstrate that data base searches have been conducted by referencing
procedures that are in place and that reasonably assure that the
searches are conducted on a timely basis. The language in the Proposing
Release was not intended to specify the recordkeeping method to be used
by transfer agents. Rather it was intended to provide flexibility to
transfer agents to create systems that adequately demonstrate
compliance with Rule 17Ad-17. However, the Commission does not believe
that referencing
[[Page 52233]]
procedures without any specific documentation demonstrating that
searches have been appropriately conducted is adequate.
The Commission also is adding language to Rule 17Ad-17 to clarify
that transfer agents must maintain written procedures on how they will
comply with the rule. The amendment to the rule is intended to give
transfer agents more guidance on what the minimum recordkeeping
requirements are while still providing flexibility to determine the
most efficient method of demonstrating compliance with the requirements
of the rule.
C. Rule 17a-24: Lost Securityholder Data
In the Proposing Release, the Commission also discussed the
creation of a data base that would contain information (e.g., TINs) on
all lost securityholders. Proposed Rule 17a-24 would have required
certain entities that hold assets for others (e.g., transfer agents and
broker-dealers) to file annually with the Commission a list of the TINs
of all lost securityholders contained in their records. The Commission
also requested comment on whether the Commission or its delegee should
create and operate a lost securityholder data base or whether the
Commission should release the information it received under Rule 17a-24
to the public to permit private entities to create data bases.
Most commenters were opposed to the creation of a lost
securityholder data base. Many commenters believed that the data base
would result in a loss of privacy for securityholders. Other commenters
suggested that the data base could result in fraudulent claims.
Finally, some commenters opined that the data base would be of limited
utility because it would require that securityholders take the
initiative to discover whether they had any unclaimed assets.
In response to concerns expressed by commenters, the Commission has
determined to adopt proposed Rule 17a-24 with revisions that will only
require the reporting of certain aggregate data. As noted in the
Proposing Release, the Commission believes that there is a need to
gather data on lost securityholders in order to obtain better
information as to the extent to which lost securityholders are not
receiving assets to which they are entitled and to assess the
effectiveness of search techniques employed by transfer agents.\25\
Similar to the proposed rule, the final rule will require each
recordkeeping transfer agent to file annually with the Commission
information on lost securityholders contained in the transfer agent's
records.\26\ However, the Commission has determined to require transfer
agents to submit only aggregate data regarding the accounts of lost
securityholders instead of the individual data that would have been
required by proposed Rule 17a-24. This aggregate information would have
been available by totaling the information that would have been
required by proposed Rule 17a-24 or currently is readily accessible by
transfer agents.
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\25\ 61 FR at 44252-44253.
\26\ 61 FR at 44253.
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Specially, the Commission is revising proposed Rule 17a-24 to
require registered transfer agents to disclose the aggregate number of
lost securityholder accounts as of June 30 of each year and the
percentage of total accounts represented by such lost securityholder
accounts. These figures would be reported for specified periods of
time: one year or less, three years or less, five years or less, or
greater than five years.\27\ The Commission also is requiring
information on lost securityholder accounts that escheat to state
unclaimed property administrators on an annual basis. To facilitate the
reporting of this information, the Commission is amending Exchange Act
Form TA-2,\28\ the annual report of registered transfer agents. The
Commission believes that this will be the least burdensome and most
efficient way for transfer agents to comply with the revised rule.
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\27\ The Commission requested comment in the Proposing Release
on whether the filing requirement should include information
concerning the length of time securityholders have been lost. 61 FR
at 44253.
\28\ Pursuant to Exchange Act Rule 17Ac2-2, registered transfer
agents are required to file an annual report on Form TA-2 by August
31 of each calendar year. 17 CFR 240.17Ac2-2.
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The Commission believes that revised Rule 17a-24 is preferable to
the rule as proposed at this time. The aggregate information required
by the adopted rule should, as a result of Rule 17Ad-17, be readily
available to transfer agents. Moreover, the collection of aggregate
data, rather than taxpayer identification numbers or other personal
data, ameliorates privacy concerns raised by some commenters. In
addition to not requiring individual data, the revised rule will enable
the Commission to better monitor the effectiveness of Rule 17Ad-17 over
time and determine whether additional measures are necessary to find
lost securityholders. Finally, the Commission has narrowed the scope of
the rule. Unlike the proposed rule which would have applied to any
recordkeeping broker-dealer or transfer agent, as adopted Rule 17a-24
applies only to recordkeeping transfer agents. The Commission believes
that a narrower focus is preferable at this time.
III. Regulatory Flexibility Analysis
The following discussion summarizes the Commission's Final
Regulatory Flexibility Analysis (``FRFA'') in accordance with the
Regulatory Flexibility Act (``RFA'') \29\ in connection with Rule 17Ad-
17, Rule 17a-24, and the related amendments to Rule 17Ad-7 adopted
today. A complete copy of the FRFA may be obtained by contacting
Theodore Lazo, Attorney, Division of Market Regulation, U.S. Securities
and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549 at
202/942-4187.
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\29\ 5 U.S.C. 601-612.
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The FRFA explains both the need for and the objectives of the rules
adopted by the Commission. As set forth in greater detail in the FRFA,
the adopted rules with establish minimum standards for all transfer
agents with respect to lost securityholders and may help the Commission
to monitor the effectiveness of these standards. The FRFA further
explains that the Commission believes that imposing an affirmative
obligation on transfer agents to search for lost securityholders is in
the public interest and will enhance investor protection.
The FRFA also (i) summarizes the significant issues raised by
public comments in response to the Commission's Initial Regulatory
Flexibility Analysis (``IRFA''), (ii) summarizes the Commission's
assessment of such issues, and (iii) states any changes made in the
proposed rules as a result of such comments. As noted in the FRFA, none
of the comment letters received related directly to the IRFA, but seven
commenters supplied data on the costs of proposed Rule 17Ad-17.\30\ As
discussed in the FRFA, the Commission believes that most of this cost
data is overstated because it includes costs not created by the rule.
The Commission also believes that the revisions to proposed Rule 17Ad-
17 (e.g., the extended time frames for conducting searches and the
exceptions to the search requirements) will eliminate any excess costs
of compliance with the rule that commenters contended would arise. The
FRFA also notes that Rule
[[Page 52234]]
17a-24 has been revised to minimize the costs to all transfer agents.
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\30\ The cost data that the Commission received is discussed
more fully in Section IV below.
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The FRFA also provides a description of and an estimate of the
number of small entities to which the rule will apply. The FRFA states
that the Commission estimates that 413 registered transfer agents
qualify as ``small entities'' and will be subject to the requirements
of the rule.
As required by the RFA, the FRFA describes the projected reporting,
recordkeeping, and other compliance requirements of the rule and
includes as estimate of the classes of small entities that will be
subject to the requirements and the type of professional skills
necessary for preparation of the reports or records. As discussed
above, Rule 17Ad-17 does not require any specific type of recordkeeping
other than that which is necessary to demonstrate compliance with the
rule, including establishing written procedures with respect to
compliance with the rule. The FRFA states that the Commission believes
that Rule 17Ad-17 as adopted provides sufficient flexibility for all
transfer agents, including transfer agents which are small entities, to
maintain records in the most cost-effective manner. The FRFA also
states that the Rule 17a-24 as adopted will require transfer agents to
report aggregate data regarding their lost securityholder accounts and
that the Commission believes that such records will be readily
available to transfer agents.
The FRFA also describes the steps the Commission has taken to
minimize the significant economic impact on small entities consistent
with the stated objectives of applicable statutes (e.g., alternative
standards for small entities). As discussed further in the FRFA, the
Commission has amended proposed Rule 17Ad-17 to provide additional
flexibility to all transfer agents, including smaller transfer agents.
In addition, the Commission has attempted to devise the most reasonable
and simplest approach that would afford transfer agents as affective
means to reduce the number of lost securityholders. The FRFA further
explains that the Commission requested comment on the adoption of a
requirement that transfer agents use search techniques based on their
periodic assessment or a requirement that transfer agents' search
procedures meet a performance based standard. In light of the comments
received on the issue, the Commission is not adopting a periodic
assessment requirement or a performance based standard. However, the
Commission has revised the proposed rule to permit transfer agents to
use any combination of services to local lost securityholders that
provides a comparable result to an information data base.
As detailed in the FRFA, the Commission has decided not to create
an exception to Rule 17Ad-17 for small entities. The FRFA explains that
the Commission believes that any increased costs incurred by small
entities because of the rule will be reasonable and are justified by
the necessity to ensure that all securityholders receive the same level
of investor protection. While the Commission has decided not to create
an exception to the rule for small entities, the adopted rule does
provide a de minimis exception for lost securityholders whose accounts
hold assets of less than $25. The Commission believes that small
transfer agents will likely rely on the de minimis exception more than
large transfer agents.\31\
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\31\ The Commission understands that small transfer agents tend
to provide services to issuers with smaller prices per share. On
occasion, when shareholders sell their positions, they fail to
completely close out their account. As a result, they may leave an
account holding only a few shares or the most recent dividend
payment. Because a few shares of a smaller issuer is more likely to
be under the de minimis amount than a few shares of a larger issuer,
the Commission believes that the de minimis exception may be more
beneficial to small transfer agents. Some large transfer agents also
have stated that because it is more cost efficient to search for all
of their lost securityholders than to segregate out the small
accounts, they probably will not use the exemption.
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With respect to Rule 17a-24, the FRFA notes that the Commission has
amended the proposed rule to reduce the reporting burden on all
transfer agents and to minimize the compexity and operational burden of
the requirements. Finally, the Commission states that any increased
costs are justified by the need to monitor the effectiveness of Rule
17Ad-17.
Based on the analysis contained in the FRFA, the Commission
believes that the adopted rules will not adversely affect small
entities and include sufficient regulatory flexibility for compliance
to minimize the impact on small entities. The FRFA is available for
public inspection in File No. S7-21-96, and a copy may be obtained by
contacting Theodore Lazo, U.S. Securities and Exchange Commission, 450
Fifth Street, NW, Mail Stop 5-1, Washington, DC 20549.
IV. Costs and Benefits of the Rules and Their Effects on
Competition, Efficiency, and Capital Formation
Section 23(a)(2) of the Exchange Act \32\ requires the Commission,
in adopting rules under the Exchange Act, to consider the competitive
effects of such rules and to make a determination whether any burden on
competition is necessary or appropriate in furthering the purposes of
the Exchange Act. Furthermore, section 3 of the Exchange Act \33\ as
amended by the recently enacted National Securities Markets Improvement
Act of 1996 (``Markets Improvement Act'') \34\ provides that whenever
the Commission is engaged in rulemaking and is required to consider or
determine whether an action is necessary or appropriate in the public
interest, the Commission also shall consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.
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\32\ 15 U.S.C. 78w(a)(2).
\33\ 15 U.S.C. 78c.
\34\ Pub. L. 104-290, section 106, 110 Stat. 3416 (1996).
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The Commission has considered Rule 17Ad-17 and Rule 17a-24 in light
of the standards cited in sections 3 and 23(a)(2) of the Exchange Act
and believes that for the reasons stated herein, the adoption of the
rules will (i) promote efficiency for securityholder recordkeeping by
subjecting all transfer agents to the same flexible rules governing
searches for lost securityholders and reporting information to the
Commission related to such searches, (ii) not adversely affect capital
formation because it relates solely to post-issuance activity, and
(iii) not impose any burden on competition not necessary or appropriate
in furtherance of the Exchange Act.
In the Proposing Release, the Commission stated its view that the
proposed Rule 17Ad-17 would not have a significant impact on transfer
agent competition. All transfer agents will be subject to the same
specified minimum standard for reasonable care in attempting to locate
securityholders with whom contact has been lost. As discussed below,
the cost of compliance with the proposed rule is minimal, and for many
transfer agents that currently conduct securityholder searches using an
information data base, the proposed rule will impose no additional
cost. Because a transfer agent's cost of compliance generally is based
upon the number of securityholders it must attempt to locate, transfer
agents, regardless of their size, should incur comparable relative
costs in exercising comparable care. On average, compliance costs
should be roughly proportional to the number of securityholder records
maintained by the transfer agent.
One commenter stated that the rule as proposed could have an
anticompetitive effect because the costs could cause additional
transfer agents to abandon an
[[Page 52235]]
already contracting market. However, this commenter did not provide any
detail as to the burden created by the rule or why such burden should
disproportionately affect certain transfer agents. The Commission
believes that the rule as adopted has been drafted so as to provide the
maximum flexibility to transfer agents to meet their obligations in the
most cost-effective manner possible. After careful consideration of the
commenter's views, the Commission has determined that Rule 17Ad-17 will
not impose any burden on competition not necessary or appropriate in
furtherance of the Exchange Act.
In the Proposing Release, the Commission estimated compliance costs
to the industry of approximately $750,000, based on an estimated cost
of $3.00 per account and a total estimated 250,000 lost securityholder
accounts. Based on more recent data obtained from several large
transfer agents, the Commission has revised its cost estimate per
account to $3.38 the first year and $1.79 per account in the following
years. Significantly, based on its most recent information, the
Commission now believes that there may be as many as 3 million lost
securityholder accounts. Due primarily to this change in estimated lost
securityholder accounts, the Commission's revised estimate of the
aggregate costs to the industry are one time compliance costs of $4.6
million and annual compliance costs of $5.2 million.
The Commission received seven comment letters that provided
specific cost estimates. One commenter estimates (assuming one search
and match) that the cost of locating an account will be approximately
$6.00, which includes out-of-pocket postage, staff, and computer time.
A second commenter states that vendor prices for data base searches may
vary widely and that the actual cost per account will range from $5.00
to $12.00.\35\ A third commenter estimates an aggregate cost of as much
as $4.75 for each lost securityholder and total initial programming
costs of $150,000.\36\ Two commenters estimate that charges from firms
for data base searches range from $2.00 per account to approximately
$1.00 per account for tape files. Another commenter anticipates that
the costs of complying with the rule will exceed $100,000 in additional
labor costs together with software and hardware costs each year.
Another commenter estimates that the cost per account for using an
information data base ranges from less than $.10 when using a CD ROM to
as much as $1.70 to use a third party vendor data base.
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\35\ The commenter's estimates include the cost of the data base
search itself plus such items as system processing expenses to
generate the search and to receive the matched file from the data
base vendor; printing and mailing expenses; handling and other
related charges for returned items; and expenses for replacement of
uncashed checks and lost securities.
\36\ The estimate of $4.75 is based on postage, data base
charges, and an increase in processing staff by two full time
positions. Currently, this commenter conducts periodic searches for
its lost securityholders.
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The Commission believes that the estimates higher than the
Commission's estimate of $3.38 per lost account overstate the costs
involved because the figures include expenses not related to the rule
or which are required already as a part of the transfer agent's duties
(e.g., the cost of shareholder mailings). Furthermore, the Commission
believes that compliance with the rule as it is being adopted will not
require transfer agents to incur any substantial costs with respect to
additional labor, hardware, or software because the rule's requirements
regarding coding securityholders as lost are consistent with current
state escheatment laws. Such state laws also require transfer agents to
be able to produce information on lost securityholders for annual
filings with the state, and therefore transfer agents' computer systems
currently should be capable of producing lists of lost securityholders
to provide to the data bases. Thus, the Commission believes that
transfer agents' current computer systems should not require
significant changes in order to comply with the rule.
Further, the Commission has amended the proposal so as to lower the
cost of compliance with the rule. For example, the Commission has
created a de minimis exception to the rule because searches for
accounts with lesser values would not produce as great a benefit (i.e.,
the cost of locating such securityholders would be a much larger
percentage of the assets to be returned). In addition, the Commission
has amended the rule to be more consistent with current state law
requirements by eliminating the requirement that three months elapse
between two mailings prior to coding a securityholder as lost.
Accordingly, the Commission is retaining its estimate of $3.38 per
account in the first year and $1.79 per account in the following years.
The Commission believes that the cost of the rule will be
outweighed by its benefits. The rule will create a uniform standard
applicable to all transfer agents thus ensuring that all investors have
the opportunity to the reunited with their assets.\37\ In addition, the
rule will guarantee that transfer agents make at least two attempts to
locate lost securityholders before forwarding names to a search firm
that may result in substantial charges to the securityholder. Thus, the
rule should help investors recover a greater percentage of their
assets.
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\37\ Some transfer agents currently attempt to locate lost
securityholders, but the extent and type of efforts used vary
greatly among transfer agents. In some cases, transfer agents
forward the names of lost securityholders directly to professional
search firms, in which case the securityholder must pay a fee to
regain its assets. In other cases, the transfer agent searches for
lost securityholders only if the search are authorized and paid for
by the issuer.
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Based on comments received, the Commission believes that the number
of lost securityholders compared to total accounts held by transfer
agents is small, approximately 1.34%. However, the actual dollar amount
of those assets can be significant. The Commission believes that the
total value of assets held in accounts coded as ``lost'' may in fact
exceed $450 million.\38\
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\38\ The data cited in this paragraph is based on a limited
informal survey of several large transfer agents.
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The Commission believes that Rule 17Ad-17 mandates a cost-effective
means for locating lost securityholders. Because of the de minimis
exception, transfer agents are not required to search for lost
securityholders unless their accounts are worth $25 or more. The
Commission believes that the rate of success for data base searches is
at least 60%.\39\ Thus, even if every account of lost securityholders
was worth only $25, the rule would provide an average benefit of $15
per lost securityholder account (i.e., 60% of $25). This estimated
benefit is larger than any commenter's estimate of the per account cost
of data base searches.\40\ Futhermore, because the value of many
accounts will exceed $25, the Commission expects that the actual
benefit will be higher.
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\39\ The Commission staff contacted several transfer agents to
obtain an estimated success rate. Only one of the transfer agents
contacted currently uses data base searches to find lost
securityholders. That transfer agent, which has been conducting
searches on a monthly basis for over a year, stated that its success
rate using data base searches is never less than 75% and sometimes
is as high as 94%. For purposes of the cost-benefit analysis, the
Commission is assuming a 60% success rate in order to be
conservative.
\40\ One commenter stated that the per account cost could be as
high as $12.00. However, as discussed above, the Commission believes
that this estimate includes many costs not created by the rule.
Also, as noted above, the Division of Market Regulation estimates
the average cost of data base searches required by the rule will
total only $3.38 per account in the first year and $1.79 per account
in the following years.
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The Commission has considered the substantial likely benefits that
investors
[[Page 52236]]
will receive from adoption of the rule and the additional cost the rule
will impose on transfer agents. The Commission has decided to adopt the
rule given the lack of consistent standards currently in effect with
respect to lost securityholders and the relatively minor cost per
account imposed by the rule. In consideration of cost, the Commission
has designed the final rule to give transfer agents maximum flexibility
to comply with the rule's requirements and to minimize their search and
recordkeeping expenses.
Rule 17a-24 as adopted differs from the proposed rule. Because the
adopted rule requires that information be reported on a form that all
transfer agents subject to the rule are required to file, the rule
should not create an additional filing burden. In addition, the
information that the reporting transfer agents must file should be
currently available to such transfer agents.\41\ Thus, because the rule
should not create any significant costs to transfer agents, the
Commission has determined that Rule 17a-24 will not impose any burden
on competition not necessary or appropriate in furtherance of the
Exchange Act.
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\41\ Transfer agents must record which of their securityholders
are lost and the date that such securityholders become lost in order
to comply with state escheatment laws.
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In addition, the Commission believes that the benefits of the rule
justify the costs. The benefits of the rule are to provide the
Commission with information to determine whether transfer agents are
more successful in locating lost securityholders and, therefore,
whether Rule 17Ad-17 is effective. The costs of compliance with Rule
17a-24 should be limited to the costs involved in compiling the
information required to be reported once a year.
V. Paperwork Reduction Act
As set forth in the Proposing Release, Rule 17Ad-17 and Rule 17a-24
contain collections of information within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\42\ Accordingly, the collection of
information requirements contained in the rules and related amendments
were submitted to the Office of Management and Budget (``OMB'') for
review and were approved by OMB which assigned the following control
numbers: Rule 17Ad-17, control number 3235-0469; and Rule 17a-24,
control number 3235-0470.\43\ The collection of information
requirements are in accordance with Section 3507 of the PRA.\44\ An
agency may not conduct or sponsor and a person is not required to
respond to a collection of information unless the agency displays a
valid OMB control number.
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\42\ 44 U.S.C. 3501 et seq.
\43\ Rule 17Ad-7 was previously submitted to OMB, which approved
the rule and assigned the following control number 3235-0136.
\44\ 44 U.S.C. 3507.
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The collections of information under Rule 17Ad-17, Rule 17a-24, and
Rule 17Ad-7 are mandatory. As described in more detail above and in the
Proposing Release, the collections of information are necessary to
enable recordkeeping transfer agents, as the usual custodians of the
records that determine the ownership of securities and the entitlement
to corporate distributions, to reduce significantly the number of lost
securityholders and for the Commission to monitor compliance with the
rule. The Commission may review this information during periodic
examinations or with respect to investigations. The records required to
be filed with the Commission and any records required to be kept
pursuant to these rules that are requested by and submitted to the
Commission will be kept confidential to the extent permitted by the
Freedom of Information Act \45\ and the Privacy Act of 1974.\46\
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\45\ U.S.C. 552.
\46\ 5 U.S.C. 552a.
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Based upon further review of the disclosure and recordkeeping
changes required by Rule 17Ad-7, the Commission is retaining its burden
estimates for the collection of information under that rule. Thus, the
description and estimated burden of the collection of information
requirement under Rule 17Ad-7 have not changed and are set forth in the
Proposing Release.
Originally, the Commission estimated compliance costs of Rule 17Ad-
17 to the industry of approximately $750,000, based on an estimated
cost of $3.00 per account and a total estimated 250,000 lost
securityholder accounts. Based on comments received questioning the
Commission's original burden estimate, the Commission obtained more
recent data from several large transfer agents. As a result, the
Commission has revised its cost estimate per account to $3.38 the first
year and $1.79 per account in the following years. Significantly, based
on its most recent information, the Commission now believes that there
may be as many as 3 million lost securityholder accounts. Due primarily
to this change in estimated lost securityholder accounts, the
Commission's revised estimate of the aggregate costs to the industry
are one time compliance costs of $4.6 million and annual compliance
costs of $5.2 million.
Due to the changes in Rule 17a-24 as adopted and the corresponding
changes on Form TA-2, the Commission will be resubmitting its
collection of information requirement to OMB for review and approval.
VI. Statutory Basis
Pursuant to section 17A(d)(1) of the Exchange Act, 15 U.S.C. 78a-
1(d)(1), the Commission amends Rule 17Ad-7 and Form TA-2 and adopts
Rule 17Ad-17 and Rule 17a-24 in Chapter II of Title 17 of the Code of
Federal Regulations.
List of Subjects in 17 CFR Parts 240 and 249
Reporting and recordkeeping requirements; Securities; Transfer
agents.
Text of the Amendments
For the reasons set out in the preamble, the Commission amends
Title 17, Chapter II of the Code of Federal Regulations to read as
follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
1. The authority citation for part 240 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78k, 78k-l,
781, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 79q,
79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless
otherwise noted.
* * * * *
2. By adding Sec. 240.17a-24 to read as follows:
Sec. 240.17a-24 Reports of lost securityholders.
(a) Each recordkeeping transfer agent shall file with the
Commission on Form TA-2 (17 CFR 249b.102) the following aggregate
information with respect to lost securityholder accounts contained on
such transfer agent's master securityholder files:
(1) The total number of lost securityholder accounts and the
percentage of lost securityholder accounts compared to total number of
accounts contained on the transfer agent's master securityholder files.
(2) The information required by paragraph (a)(1) of this section
shall be provided separately for securityholders lost one year or less,
three years or less, five years or less, and more than five years and
for securityholders whose assets which have escheated to unclaimed
property administrators within the last calendar year.
[[Page 52237]]
(b) For purpose of this section, lost securityholder means a
securityholder:
(1) To whom an item of correspondence that was sent to the
securityholder at the address contained in the transfer agent's master
securityholder file has been returned as undeliverable; provided,
however, that if such item is re-sent within one month to the lost
securityholder, the transfer agent may deem the securityholder to be a
lost securityholder as of the day the re-sent item is returned as
undeliverable and
(2) For whom the transfer agent has not received information
regarding the securityholder's new address.
3. Section 240.17Ad-7 is amended by adding paragraph (i) to read as
follows:
Sec. 240.17Ad-7 Record retention.
* * * * *
(i) The records required by Sec. 240.17Ad-17(c) shall be maintained
for a period of not less than three years, the first year in an easily
accessible place.
4. Section 240.17Ad-17 is added to read as follows:
Sec. 240.17Ad-17 Transfer agents' obligation to search for lost
securityholders.
(a)(1) Every recordkeeping transfer agent whose master
securityholder file includes accounts of lost securityholders shall
exercise reasonable care to ascertain the correct addresses of such
securityholders. In exercising reasonable care to ascertain for its
master securityholder file such lost securityholders' current
addresses, each recordkeeping transfer agent shall conduct two data
base searches using at least one information data base service. The
transfer agent shall search by taxpayer identification number or by
name if a search based on taxpayer identification number is not
reasonably likely to locate the securityholder. Such data base searches
must be conducted without charge to a lost securityholder and with the
following frequency:
(i) Between three and twelve months of such securityholder becoming
a lost securityholder and
(ii) Between six and twelve months after the transfer agent's first
search for such lost securityholder.
(2) A transfer agent may not use a search method or service to
establish contact with lost securityholders that results in a charge to
a lost securityholder prior to completing the searches set forth in
paragraph (a)(1) of this section.
(3) A transfer agent need not conduct the searches set forth in
paragraph (a)(1) of this section for a lost securityholder if:
(i) It has received documentation that such securityholder is
decreased or
(ii) The aggregate value of assets listed in the lost
securityholder and all securities owned by the lost securityholder as
recorded in the transfer agent's master securityholder files, is less
than $25; or
(iii) The securityholder is not a natural person.
(b) For purposes of this section:
(1) Information data base service means either:
(i) Any automated data base service that contains addresses from
the entire United States geographic area, contains the names of at
least 50% of the United States geographic area, contains the names of
at least 50% of the United States adult population, is indexed by
taxpayer identification number or name, and is updated at least four
times a year; or
(ii) Any service or combination of services which produces results
comparable to those of the service described in paragraph (b)(1)(i) of
this section in locating lost securityholders.
(2) Lost securityholder means a securityholder:
(i) To whom an item of correspondence that was sent to the
securityholder at the address contained in the transfer agent's master
securityholder file has been returned as undeliverable; provided,
however, that if such item is re-sent within one month to the lost
securityholder, the transfer agent may deem the securityholder to be a
lost securityholder as of the day the resent item is returned as
undeliverable; and
(ii) For whom the transfer agent has not received information
regarding the securityholder's new address.
(c) Every recordkeeping transfer agent shall maintain records to
demonstrate compliance with the requirements set forth in this section
which shall include written procedures which describe the transfer
agent's methodology for complying with this section.
PART 249b--FURTHER FORMS, SECURITIES EXCHANGE ACT OF 1934
5. The authority citation for part 249b continues to read in part
as follows:
Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;
* * * * *
Note: Form TA-2 does not and the amendments will not appear in
the Code of Federal Regulations.
Sec. 249b.102 [Form TA-2 Amended]
6. Form TA-2 (referenced in Sec. 249b.102) is amended by adding
paragraph 8 to Instruction I.A. to read as follows:
Form TA-2
* * * * *
I. General Instruction for Filing and Amending Form TA-2.
A. * * *
8. ``Lost securityholder'' is defined in Rule 17a-24(b)(1) (17 CFR
240.17a-24(b)(1)).
* * * * *
Sec. 249b.102 [Form TA-2 Amended]
7. Form TA-2 (referenced in Sec. 249b.102) is amended by adding
paragraph c to Question 4 to read as follows:
Form TA-2
* * * * *
4. * * *
c. (i) Number of lost securityholder accounts and (ii) percentage
of total accounts represented by lost securityholder accounts as of
June 30 for:
Accounts of securityholders lost one year or less:---------------------
Accounts of securityholders lost three years or less:------------------
Accounts of securityholders lost five years or less:-------------------
Accounts of securityholders lost more than five years:-----------------
Accounts of securityholders which have escheated to states within the
year ended June 30:----------------------------------------------------
* * * * *
Dated: October 1, 1997.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-26519 Filed 10-6-97; 8:45 am]
BILLING CODE 8010-01-M
