As increasingly aggressive contract auditors target more firms for property escheatment, firms must seek proper counsel to know how much data to provide
Amid Broomfield, Colorado’s majestic Rocky Mountains terrain, roughly 175 transfer agents, unclaimed property experts, corporate issuers and software vendors gathered for the Shareholder Services Association’s annual conference. As SSA president Patrick Burke explained during an opening cocktail reception and dinner on July 15, this year additional free time was built into the schedule to allow for networking, which can provide a support system when SSA members face complex issues at work and need advice from peers with relevant experience.
Burke introduced the conference’s content portion on July 16 with an update on industry issues and trends over the past year and the Association’s efforts to better market itself. Then identity theft expert John Sileo shared his personal experience of losing $300,000 and two businesses after having his online identity stolen and helpful tips on protecting your identity and personal data.
‘You have to see who you are is no longer just human, it’s also virtual,’ he said. ‘You have to take ownership of it at a basic level. Otherwise, it doesn’t matter what you learn in cyber-security class – and if you don’t take ownership, your employees and shareholders won’t internalize it.’
Sileo drove home the need for a healthy dose of skepticism when being asked for personal information, which is often cajoled out of people through control mechanisms, denying them time to think, flattery and bribes (free downloads). ‘Ask yourself who’s in control of a conversation and if you didn’t initiate it, end it,’ he advised.
Refusing to be rushed by people requesting data, taking time to verify what you’re being told by calling your bank for example enables you to recover your critical thinking functions that can stop you from clicking on that link or answering a question, which reduces opportunities for fraud, he said.
Sileo provided some best practice tips to help nudge people toward a more defensive posture to combat identity theft.
In other session, Hannah Ashdown, BP's head of group secretariat, discussed the oil giant’s recent efforts to shore up shareholder engagement, working together with its US DR depositary agent, JPMorgan, in order to minimize the potential for unclaimed property claims.
Motivated by a tender offer for ADR shares in the US, BP developed a five-year plan that included targeting quick gains through sending a cover letter along with its dividend check mailing to US ADR shareholders and identifying long term goals such as dematerialization in the UK market, a bereavement guide to clarify options for heirs of deceased shareholders and a website redesign aimed at better engaging shareholders.
The strategy BP devised includes efforts to retain ‘shareholders who are known, consciously investing [rather than having inherited stock] and engaged and wanting to be communicated with in an efficient manner,’ while helping people who haven’t consciously decided to invest donate or sell their shares, said Ashdown.
Although BP’s five-year plan requires an investment of people, time, and effort and doesn’t offer a quick fix, Ashland believes it will be worthwhile in the long term. ‘We’ve increased brand awareness so shareholders feel they’re being touched by the company they’ve actively decided to invest in,’ she said. ‘In the UK, we’ve reunited 2.5 million in [pounds] sterling in dividends with shareholders that would have been lost.’
An update on unclaimed property law, which varies by state, warned attendees to be prepared for a securities audit that states are hiring contract auditors such as Kelmar Associates to do. The goal of these audits, which are being proposed by increasingly aggressive contingency fee auditors who stand to gain from escheatment of property to the states where targeted companies are domiciled, has more to do with generating revenue for the states than protecting consumers who aren’t aware they have rights to property at risk of being declared abandoned, said Jennifer Borden, general counsel for Unclaimed Property Recovery Reporting (UPRR), a leading investor location consulting firm.
When faced with requests for lists of all active account owners, which contract auditors intend to run against a federally discredited ‘death master file’, companies need to get proper legal counsel from experts who ‘will make sure you don’t provide too much information or irrelevant information and understand what they’re going to do with your data,’ said Valerie Jundt, managing director of Keane’s national consulting and advisory services group.
With regard to ongoing efforts to draft and pass a uniform unclaimed property law, she said, ‘We’re looking at dormancy triggers to make sure accounts are only escheated if [shareholders are] lost. We want one law with a [consistent] loss standard.’
