Investor Bulletin: 

Lost and Stolen Securities 

The SEC’s Office of Investor Education and Advocacy 

is issuing this Investor Bulletin to help educate investors 

about lost and stolen securities and the Commission’s Lost 

and Stolen Securities Program (“LSSP”), a database 

for securities certificates reported lost, stolen, missing, or 

counterfeit.

About Lost and Stolen Securities

When a security certificate is retired, such as 

when a bond is redeemed or ownership of stock 

is transferred, the certificate is cancelled by the 

transfer agent. Cancellation normally involves both 

an accounting entry on the books of the transfer 

agent and an alteration of the certificate itself. After 

cancellation of a registered certificate, the Exchange

Act’s record retention rules require that the certificate 

or appropriate record of the certificate be retained 

for not less than six years. In recent years, many 

corporate bond issues have been called for redemption 

and cancelled decades before their maturities. These 

bond redemptions and an active stock market have 

generated vast amounts of cancelled securities 

certificates that must be processed, stored, and 

safeguarded. 

Certificate processing of retired certificates can involve 

significant costs and risks. For example, in 1992, 

cancelled bond certificates with a face amount of 

approximately $111 billion disappeared after being 

delivered from a transfer agent’s warehouse to a 

certificate destruction vendor. The certificates later 

began to resurface worldwide. A number of banks and 

brokers, as well as individuals, were defrauded through 

sales of the cancelled certificates for cash or through 

use of the cancelled certificates as loan collateral. In 

another instance, a transfer agent’s shipping bags 

filled with cancelled certificates were stolen while 

in commercial air transit. When the shipping bags 

were stolen, neither the transfer agent nor its bank 

processing agent realized that the certificates were 

missing. A number of the certificates later resurfaced 

in off-market transactions. 

In many cases, the stolen certificates have reentered 

the marketplace either through sales or as collateral 

for loans, resulting in fraud on public investors, public 

companies, creditors, broker-dealers, and transfer 

agents. Not only do situations such as these present 

potential liability for the transfer agents responsible, 

but they consume the resources of regulatory and 

criminal law enforcement agencies.

The SEC’s Lost and Stolen Securities 

Program

Congress directed the establishment of the LSSP 

to curtail trafficking in lost, stolen, missing, and 

counterfeit securities certificates. Rule 17f-1 under

the Exchange Act governs LSSP operations. The LSSP 

Investor Assistance (800) 732-0330 www.investor.gov

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consists mainly of a database for securities that have 

been reported lost, stolen, missing, or counterfeit. The 

LSSP has two essential parts: “reports” and “inquiries.” 

Most financial institutions (including exchanges, banks, 

brokers, clearing agencies, and transfer agents) are 

required to report any certificates that they discover 

to be lost, stolen, missing, or counterfeit. These 

institutions also must inquire of the LSSP about any 

securities certificate valued at more than $10,000 

that comes into their “possession or keeping.” These 

financial institutions also may voluntarily report or 

inquire about other certificates. 

Beginning in 2000, LSSP members began voluntarily 

adding reports of cancelled securities certificates to 

the database as a result of an industry-wide initiative 

to make the database more complete and to assist 

LSSP participants in determining whether securities 

certificates that come into their possession are valid.

The LSSP is operated by the Securities Information 

Center (“SIC”) as the SEC’s designee pursuant to 

a contract. SIC receives all reports and inquiries, 

responds to inquiries, and maintains the LSSP’s 

database. As of December 31, 2011, the LSSP’s 

database reflected securities with a value of 

approximately $801billion. There were 24,969 

reporting institutions. During the year 2011, reports 

were made on 512,807 certificates (an average of 

2,035 certificates per business day); inquiries were 

made on 10,998,507 certificates (an average of 

43,642 certificates per business day); and matches or 

“hits” resulting from inquiries occurred on 348,791 

certificates, which had a value of approximately 

$8,789,674,628. The hits essentially warned the 

inquirers that the certificates had been reported as lost, 

stolen, missing, or counterfeit and were not eligible for 

transfer.

What can investors do?

Investors holding certificates should take care in 

safeguarding them from theft or other loss. If your 

securities certificate is lost, accidentally destroyed, 

or stolen, you should immediately contact the 

transfer agent and request a “stop transfer” to prevent 

ownership of the securities from being transferred 

from your name to another’s. Your broker may be able 

to assist you with this process. The broker or transfer 

agent will report the certificates as missing to the LSSP. 

If you later find the missing certificate, you should 

notify whomever you called to place the “stop transfer” 

so that the lost or stolen securities report may be 

removed. Otherwise, you may have difficulty selling or 

transferring the securities.

If you are expecting a certificate through the mail and 

it doesn’t arrive, you should immediately contact the 

organization that arranged the transaction -- typically 

your brokerage firm. While many companies choose 

to use registered or certified mail to deliver securities 

certificates to individuals, some prefer to use regular 

mail so as not to call attention to the potential value of 

the item.

You can get a new certificate to replace the missing 

one. However, before issuing a new certificate, issuers 

usually require the following: 

The owner must state all the facts surrounding the 

loss in an affidavit;

The owner must buy an indemnity bond to 

protect the issuer and the transfer agent against the 

possibility that the lost certificate may be presented 

later by an innocent purchaser. The bond usually 

costs between two or three percent of the current 

market value of the missing certificates; and

The owner must request a new certificate before 

an innocent purchaser acquires it. 

We recommend that you keep a copy of both sides 

of your certificates separate from the certificates 

themselves. If a certificate is lost or stolen and 

then transferred on the books of the transfer agent 

to another owner, it may be impossible for you to 

establish that you owned it because the transfer agent 

will no longer have a record of your name. But if you 

have a record of the certificate numbers, the transfer 

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agent should be able to reconstruct when it was 

transferred and to whom.

Securities certificates are valuable and should be 

safeguarded. To avoid the cost and burden of 

safeguarding certificates, some investors let their 

brokerage firm hold their securities for them in 

“street name.” And increasingly, certificates for many 

securities are not even available, as companies may use 

direct registration “book entry” securities where your 

ownership is reflected on the books of a company. 

For more information on how investors can hold 

securities, please see our publication Holding Your 

Securities – Get the Facts.

More information on lost and stolen certificates and 

advice for investors is available at http://www.sec.gov/

answers/lostcert.htm.

RELATED INFORMATION

We offer educational materials so that investors 

can develop an understanding of the securities 

industry and learn how to avoid costly mistakes 

and fraud. Our educational materials also 

provide tips on how investors can invest wisely. 

Investors can order our free publications by 

calling (800) SEC-0330, or access them on 

the Internet through the SEC’s Investor.gov

website. For additional educational information 

for investors, see the SEC’s Investor.gov website 

or the Office of Investor Education and

Advocacy’s homepage. 

The Office of Investor Education and Advocacy 

has provided this information as a service to 

investors. It is neither a legal interpretation nor 

a statement of SEC policy. If you have questions 

concerning the meaning or application of a 

particular law or rule, please consult with an 

attorney who specializes in securities law.

Investor Assistance (800) 732-0330 September 2012

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