GlossaryGuide

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 a “stop transfer” to prevent ownership of the securities from being transferred from your name to another’s. Your broker may be able to assist you with this process and the broker or transfer agent will report the certificates as missing to the SEC’s lost and stolen securities program. 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.

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 to use 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 two or three percent of the current market value of the missing certificates; and
3. The owner must request a new certificate before an innocent purchaser acquires it.

We recommend that you keep a copy of both sides of your certificates 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 let their brokerage firm hold their securities for them in “street name”. And increasingly, certificates for many securities are not even available, as companies may use direct registration “book entry” securities where your ownership is reflected on the books of a company. For more information on how investors can hold securities, please see our publication Holding Your Securities – Get the Facts.

For a more in depth discussion and additional materials, visit our Investor Bulletin: Lost and Stolen Securities.