II

103D CONGRESS

1ST SESSION S. 1715

To provide for the equitable disposition of distributions that are held by

a bank or other intermediary as to which the beneficial owners are

unknown or whose addresses are unknown, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 19 (legislative day, NOVEMBER 2), 1993

Mrs. HUTCHISON (for herself, Mrs. BOXER, Mr. RIEGLE, Mr. FAIRCLOTH, Mr.

PRYOR, Mr. CAMPBELL, Mr. PRESSLER, Mr. HARKIN, Mr. PELL, Mr.

BAUCUS, Mr. GRAHAM, Mr. BREAUX, Mr. GRASSLEY, Mr. REID, Mr.

BURNS, Mr. HELMS, Mr. AKAKA, Mr. SIMON, Mr. COCHRAN, Mr. LOTT,

Mr. BOND, Mr. BRADLEY, Mr. SHELBY, Ms. MOSELEY-BRAUN, Mr.

FORD, Mr. SMITH, Mr. COATS, Mr. CHAFEE, Mr. WOFFORD, Mr. SIMPSON, Mr. LAUTENBERG, Mr. BENNETT, and Mrs. FEINSTEIN) introduced

the following bill; which was read twice and referred to the Committee

on Banking, Housing, and Urban Affairs

A BILL

To provide for the equitable disposition of distributions that

are held by a bank or other intermediary as to which

the beneficial owners are unknown or whose addresses

are unknown, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Equitable Escheatment

5 Act of 1993’’.
2

•S 1715 IS

1 SEC. 2. DISPOSITION OF UNCLAIMED DISTRIBUTIONS.

2 Title VI of the Act entitled ‘‘An Act to increase de3 posit insurance from $20,000 to $40,000, to provide full

4 insurance for public unit deposits of $100,000 per ac5 count, to establish a National Commission on Electronic

6 Fund Transfers, and for other purposes.’’ and approved

7 October 28, 1974 (12 U.S.C. 2501 et seq.) is amended—

8 (1) by striking the title heading and inserting

9 the following:

10 ‘‘TITLE VI—DISPOSITION OF

11 ABANDONED MONEY ORDERS

12 AND TRAVELER’S CHECKS

13 AND OTHER UNCLAIMED DIS14 TRIBUTIONS

15 ‘‘Subtitle A—Disposition of Aban16 doned Money Orders and Trav17 eler’s Checks’’; and

18 (2) by adding at the end the following new sub19 title:

20 ‘‘Subtitle B—Disposition of Other

21 Unclaimed Distributions

22 ‘‘SEC. 611. CONGRESSIONAL FINDINGS.

23 ‘‘The Congress finds that—

24 ‘‘(1) banks and other intermediaries hold secu25 rities which are registered in the street name or

26 nominee name of banks or other intermediaries;
3

•S 1715 IS

1 ‘‘(2) a very small percentage of the dividends,

2 interest, and other distributions made by issuers of

3 securities is unable to be transmitted by the banks

4 and other intermediaries because the intermediaries

5 do not know the identities or addresses of the bene6 ficial owners;

7 ‘‘(3) this small percentage of unclaimed dis8 tributions nonetheless amounts to a substantial sum

9 of money annually; and

10 ‘‘(4) as a matter of equity among the several

11 States, the State entitled to such unclaimed distribu12 tions should be the State in which the principal exec13 utive offices of the issuer of such distribution are

14 maintained.

15 ‘‘SEC. 612. DEFINITIONS.

16 ‘‘For purposes of this subtitle, the following defini17 tions shall apply:

18 ‘‘(1) BENEFICIAL OWNER.—The term ‘bene19 ficial owner’ means any person who holds an owner20 ship interest in a security and is entitled to receive

21 the economic benefits of ownership.

22 ‘‘(2) DISTRIBUTION.—The term ‘distribution’

23 means the payment of a dividend or interest or any

24 other transfer of money, securities, or value made

25 with respect to a security, including a transfer of
4

•S 1715 IS

1 any ownership interest in such security and any pay2 ment of principal with respect to such security.

3 ‘‘(3) HOLDER.—The term ‘holder’ means a per4 son in possession of all or part of a distribution who

5 is not the beneficial owner of the security with re6 spect to which a distribution is made, including

7 banks, depositories, brokerage firms, and other fi8 nancial intermediaries.

9 ‘‘(4) ISSUER.—The term ‘issuer’ means a cor10 poration, partnership, trust, or governmental entity,

11 including a federally chartered or foreign entity, that

12 issues equity or debt securities.

13 ‘‘(5) PRINCIPAL EXECUTIVE OFFICES.—

14 ‘‘(A) IN GENERAL.—Except as provided in

15 subparagraph (B), the term ‘principal executive

16 offices’ means—

17 ‘‘(i) the offices identified as the prin18 cipal executive offices in the most recent

19 filing, as required under section 13 of the

20 Securities Exchange Act of 1934, during

21 the 12-month period ending on the date

22 immediately prior to the date of payment

23 of such distribution;

24 ‘‘(ii) in any case in which principal ex25 ecutive offices were not identified or re-
5

•S 1715 IS

1 quired to be identified in a filing described

2 in clause (i), or where no filing was re3 quired, the offices identified as the prin4 cipal executive offices in—

5 ‘‘(I) the most recent required fil6 ing with a Federal regulatory agency;

7 or

8 ‘‘(II) if no filing described in

9 subclause (I) was required, any other

10 filing with a self-regulatory agency (as

11 defined in section 3(26) of the Securi12 ties Exchange Act of 1934); and

13 ‘‘(iii) in any case in which no filing

14 described in clause (i) or (ii) was made,

15 the offices identified by the holder.

16 ‘‘(B) STATE AND MUNICIPAL ISSUERS.—In

17 the case of any issuer that is a State or States,

18 or a political subdivision thereof, the principal

19 executive offices shall be deemed to be located

20 within such State or States.

21 ‘‘(6) SECURITY.—The term ‘security’ has the

22 same meaning as in section 2 of the Securities Act

23 of 1933.
6

•S 1715 IS

1 ‘‘(7) STATE.—The term ‘State’ has the same

2 meaning as in section 3(a)(3) of the Federal Deposit

3 Insurance Act.

4 ‘‘SEC. 613. STATE ENTITLEMENT TO ESCHEAT OR CUSTODY.

5 ‘‘(a) ESCHEAT OR CUSTODY TO STATE IN WHICH

6 THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER

7 ARE LOCATED.—

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

9 if—

10 ‘‘(A) the books and records of the holder

11 of a distribution paid on a security do not con12 tain the last-known address of the beneficial

13 owner of such security; or

14 ‘‘(B) the last-known address of the bene15 ficial owner of a security, as contained on the

16 books and records of the holder of a distribu17 tion paid with respect to such security, is in a

18 State that does not provide for the escheat or

19 custodial taking of any distribution with respect

20 to such security or is in a foreign country;

21 such distribution shall be subject to escheat or cus22 todial taking only by the State in which the principal

23 executive offices of the issuer of the security are lo24 cated, to the extent that the laws of such State re25 lating to the escheat or custodial taking of un-
7

•S 1715 IS

1 claimed property authorize the State to take posses2 sion of such distribution.

3 ‘‘(2) RECOVERY BY STATE DESCRIBED IN PARA4 GRAPH (1)(B).—If a law that provides for the escheat

5 or custodial taking of any distribution by any State

6 described in paragraph (1)(B) is enacted by or oth7 erwise takes effect in such State at any time after

8 a distribution has escheated to or has been taken

9 into the custody of another State pursuant to para10 graph (1), the State described in paragraph (1)(B)

11 shall have the right to recover such distribution

12 (other than amounts paid by the other State to the

13 beneficial owner) from the other State for disposi14 tion in accordance with such law.

15 ‘‘(b) ESCHEAT OR CUSTODY TO STATE IN WHICH

16 THE PRINCIPAL EXECUTIVE OFFICES OF THE HOLDER

17 ARE LOCATED.—

18 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

19 if, in any case described in subparagraph (A) or (B)

20 of subsection (a)(1)—

21 ‘‘(A) the books and records of the holder

22 of a distribution do not contain the identity of

23 the issuer of the security with respect to which

24 the distribution was made; or
8

•S 1715 IS

1 ‘‘(B) the principal executive offices of the

2 issuer of the security with respect to which the

3 distribution was made are in a State which does

4 not provide for the escheat or custodial taking

5 of any distribution with respect to such security

6 or are in a foreign country;

7 such distribution shall be subject to escheat or cus8 todial taking only by the State in which the principal

9 executive offices of the holder of the distribution are

10 located, to the extent that the laws of such State re11 lating to the escheat or custodial taking of un12 claimed property authorize the State to take posses13 sion of such distribution.

14 ‘‘(2) RECOVERY BY STATE DESCRIBED IN PARA15 GRAPH (1)(B).—If a law that provides for the escheat

16 or custodial taking of any distribution by a State de17 scribed in paragraph (1)(B) is enacted by or other18 wise takes effect in such State at any time after a

19 distribution has escheated to or has been taken into

20 the custody of another State pursuant to paragraph

21 (1), the State described in paragraph (1)(B) shall

22 have the right to recover such distribution (other

23 than amounts paid by the other State to the bene24 ficial owner) from the other State for disposition in

25 accordance with such law.
9

•S 1715 IS

1 ‘‘(c) DETERMINATION OF IDENTIFICATION AND AD2 DRESSES OF BENEFICIAL OWNERS, ISSUERS, AND HOLD3 ERS.—

4 ‘‘(1) IN GENERAL.—With respect to any un5 claimed distribution in the possession of a holder,

6 the holder’s determination of—

7 ‘‘(A) the identity and address of the bene8 ficial owner of the security with respect to

9 which such distribution was made;

10 ‘‘(B) the issuer of such security; and

11 ‘‘(C) the location of the principal executive

12 offices;

13 shall be prima facie evidence for purposes of this

14 subtitle. In making such determinations, the holder

15 shall make reasonable efforts to review its books and

16 records, publicly available information, and

17 databases containing such information.

18 ‘‘(2) BURDEN OF SHOWING OTHERWISE.—The

19 burden shall rest upon any State seeking to contest

20 a holder’s determination in accordance with para21 graph (1) to demonstrate, at the cost of such State,

22 that the books and records of the holder, other pub23 licly available information, or databases identify a

24 different State.
10

•S 1715 IS

1 ‘‘(3) BENEFICIAL OWNER UNKNOWN.—For pur2 poses of this subsection, a holder’s determination,

3 after reasonable inquiry, that its books and records

4 do not contain the identity or last-known address of

5 the beneficial owner of the security with respect to

6 which a distribution was made shall be conclusive

7 evidence that its books and records do not contain

8 such identity or address.

9 ‘‘(d) DISTRIBUTIONS IN EVENT OF PRINCIPAL EXEC10 UTIVE OFFICES IN MORE THAN 1 STATE.—If an issuer

11 or holder identifies principal executive offices in more than

12 1 State, each State identified as the location of a principal

13 executive office shall be entitled to escheat or to take

14 custodially on a pro rata basis to the extent that the laws

15 of such State relating to the escheat or custodial taking

16 of unclaimed property authorize the State to take posses17 sion of a distribution.

18 ‘‘SEC. 614. CHANGES IN PRINCIPAL EXECUTIVE OFFICES

19 DESIGNATION.

20 ‘‘No issuer may change the issuer’s designation of

21 principal executive offices in any filing described in section

22 612(5)(A) for the sole purpose of altering the entitlement

23 of any State to escheatment or custodial possession of

24 property subject to this subtitle.
11

•S 1715 IS

1 ‘‘SEC. 615. SCOPE OF APPLICATION.

2 ‘‘(a) IN GENERAL.—Section 613 shall apply to all un3 claimed distributions (other than amounts paid to the ben4 eficial owner) without regard to the date on which any

5 such distribution was made by the issuer or whether any

6 distribution was paid over by a holder to 1 or more States.

7 ‘‘(b) OTHER APPLICATION.—With respect to dis8 tributions that escheated to or were taken into custody

9 by a State before the date of enactment of the Equitable

10 Escheatment Act of 1993—

11 ‘‘(1) those distributions described in section

12 613(a)(1) (other than amounts paid by such State

13 to a beneficial owner) shall be subject to escheat or

14 custodial taking by any other State in the manner

15 provided in section 613(a); and

16 ‘‘(2) those distributions described in section

17 613(b)(1) (other than amounts paid by such State

18 to a beneficial owner) shall be subject to escheat or

19 custodial taking by any other State in the same pro20 portion as the proportion which that other State is

21 entitled to receive of the total distributions payable

22 by such State under paragraph (1).’’.

23 SEC. 3. TECHNICAL AMENDMENTS.

24 Sections 602 and 604 of title VI of the Act entitled

25 ‘‘An Act to increase deposit insurance from $20,000 to

26 $40,000, to provide full insurance for public unit deposits
12

•S 1715 IS

1 of $100,000 per account, to establish a National Commis2 sion on Electronic Fund Transfers, and for other pur3 poses.’’ and approved October 28, 1974 (12 U.S.C. 2501

4 note, 2502) are amended by striking ‘‘title’’ and inserting

5 ‘‘subtitle’’ each place such term appears.

Æ