A:

The U.S. Securities and Exchange Commission (SEC) does not have its own escheatment process. Rather, the SEC notes that the escheatment process is governed by state regulations. States can use the escheatment process to claim inactive brokerage accounts and other types of property.

History of Escheatment

Escheatment is the right of the government to take ownership of unclaimed or abandoned property. This right is derived from early common law. The process serves as a lost and found procedure for personal property.

Escheatment by States

States require that financial institutions report when personal property has been abandoned or unclaimed after a certain period of time. The most common time frames are three to five years. The financial institution must make a diligent effort to locate the owner before the account can be considered abandoned. If there is no response to the diligent effort, the personal property is then considered to be abandoned.

When the state takes ownership of the property, it creates a bookkeeping entry. An owner may make a claim against the entry to regain ownership of the property. The state often sells the stocks in a brokerage account and treats the proceeds as state funds.

A person whose property has been escheated can verify ownership of the property by filing a claim with the state. If the claim is verified, the state provides a payment to the owner equal to the value of the account at the time of escheatment. The owner is not entitled to any interest or dividends on stocks when regaining ownership of the property. The procedures for making a claim differ from state to state.

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