Replacing Lost Or Stolen Securities Certificates

Securities certificates are the written evidence of the ownership of shares of stock in, or an obligation to the bondholder by, a particular company.4 min read

What Is a Securities Certificate?

Securities certificates are the written evidence of the ownership of shares of stock in, or an obligation to the bondholder by, a particular company. Certificates are valuable because they are negotiable instruments like checks drawn on a bank. Certificates are issued by the company, acting as its own transfer agent, or by an outside "transfer agent."

What to Do If a Securities Certificate Is Lost or Stolen

If you discover that your securities certificate is lost, accidentally destroyed, or stolen, you should immediately contact the transfer agent, or a broker-dealer and request that a "stop transfer" be placed against the missing securities. The "stop transfer" is an important step in protecting your ownership interest in a security and will prevent a person who improperly has possession of the certificate from having the ownership transferred to his or her name.

In addition, the transfer agent or broker-dealer will notify the SEC's lost and stolen program of the missing, lost or stolen securities. This report reduces the likelihood that people can traffic in stolen securities because broker-dealers and banks can inquire whether securities presented for sale or as collateral for a loan are reported as missing, lost or stolen.

If you are expecting receipt of a certificate through the mail, and it doesn't arrive, you should immediately contact the organization that arranged the transaction -- typically your broker-dealer. While many transfer agents, banks, broker-dealers and corporations choose to use registered or certified mail to deliver stock certificates to individuals, there is no specific Federal requirement that they do so, and some prefer regular mail so as not to call attention to the potential value of the item. A certificate lost in the mail can usually be replaced without cost to the owner if the loss is reported promptly.

How to Obtain a New Certificate

When a securities certificate belonging to a security holder is lost, accidentally destroyed, or stolen, the security holder can obtain a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the owner of the lost certificate to satisfy several requirements:

1. The owner must set forth, in an affidavit, all the facts surrounding the loss.
2. The owner must post 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 for value (the indemnity bond usually is an "open penalty" bond in which the owner of the lost certificate usually pays a premium for the bond, determined by the facts surrounding the lost and whether the securities were in registered or bearer form, and the bond does not protect the owner against losses incurred by the issuer or its transfer agent as a result of the original lost certificate).
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