Lost or Stolen Stock Certificate?
Whether you have lost your stock certificate or it has been stolen, you are still the owner of the stock. However, you should act promptly to replace your physical certificate in order to prevent any frauds and misuses.
As soon as you discover that your certificate has been stolen or you accidentally destroy it or lose it, you should contact the transfer agent, notify them about the loss and request what is called a "stop transfer" to be placed against the missing securities. The "stop transfer" is needed to prevent others from transferring ownership from your name to someone else's. The loss of the certificate will be reported to the SEC's lost and stolen securities program.
If at a later point of time you find the missing securities certificate, you should inform the person you called to place the "stop transfer" in order to remove the lost or stolen securities report. Otherwise, you may experience difficulties selling the securities.
Replacing Your Lost or Missing Securities Certificates
In order to get a new certificate to replace your lost one, usually you would need to do the following:
- You would have to explain in writing all the facts surrounding the loss of your certificate.
- You would have to buy an indemnity bond to safeguard the transfer agent and the corporation against the possibility of a future use of the certificate by an innocent buyer. Typically the bond amounts between 1-2% of the current market value of the lost certificate.
- You would have to request a new certificate before an innocent buyer has acquired it.
Precautions
It is a good idea to have a copy of both sides of your stock certificates and keep it in a separate place. Thus, if your certificate gets stolen (or you lose it) and then gets transferred to another owner, you would have a record of the certificate numbers. This will help the transfer agent to reconstruct when the certificate has been transferred and to whom.
Finally, you should know that securities certificates should be safeguarded. If you want to avoid the cost and burden of safeguarding your certificates you may opt for letting your brokerage firm hold your securities for you.
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