Lost Securityholders and Unresponsive Payees; Final Rule (SEC - Pre-Fed. Reg. Version)

The SEC has adopted amendments to Exchange Act Rule 17Ad-17 ("Transfer Agents' Obligation to Search for Lost Securityholders") to implement the requirements of Dodd-Frank Section 929W. That Section added to Exchange Act Section 17A subsection (g), "Due Diligence for the Delivery of Dividends, Interest, and Other Valuable Property Rights," which directs the SEC to revise Rule 17Ad-17. The revision is intended to:

• extend the requirements of Rule 17Ad-17 to search for lost securityholders from only recordkeeping transfer agents to brokers and dealers as well;
• add a requirement that "paying agents" notify "unresponsive payees" that such paying agents have sent a securityholder a check that has not yet been negotiated; and
• add certain other provisions.

The SEC is also adopting a proposed conforming amendment to Rule 17Ad-7(i) and new Rule 15b1-6, a technical rule to help ensure that brokers and dealers receive notice of their new obligations with respect to lost securityholders and unresponsive payees.

Effective Date: The amendments will become effective on [insert 60 days after the date of publication of the release in the Federal Register].

Compliance Date: The compliance date will be [twelve months after the date of publication of the release in the Federal Register].

Click here to view rule release in full (links externally to SEC website).See also: Proposed Rule Release No. 34-64099 and Comments.