I

103D CONGRESS

1ST SESSION H. R. 2443

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 HOUSE OF REPRESENTATIVES

JUNE 17, 1993

Mr. GONZALEZ (for himself and Mr. LEACH) introduced the following bill;

which was referred to the Committee on Banking, Finance and Urban Affairs

OCTOBER 28, 1993

Additional sponsors: Mr. NEAL of North Carolina, Mr. BACCHUS of Florida,

Mr. MCCOLLUM, Mr. LAROCCO, Mr. ORTON, Mr. DEUTSCH, Mr. JOHNSTON of Florida, Mrs. MEEK, Mrs. FOWLER, Mr. GIBBONS, Mr. SHAW,

Mrs. THURMAN, Mr. HASTINGS, Mr. SANDERS, Mr. RAHALL, Mr. THOMAS of Wyoming, Mr. WATT, Ms. SHEPHERD, Mr. KLEIN, Mr. SMITH of

Iowa, Mr. OXLEY, Mr. PASTOR, Mr. JEFFERSON, Mr. PETERSON of Florida, Mr. BEREUTER, Mr. VALENTINE, Mr. BARRETT of Wisconsin, Mr.

LANCASTER, Mr. CRAMER, Mr. GALLEGLY, Mr. APPLEGATE, Mr. GLICKMAN, Mr. LANTOS, Mr. MORAN, Mr. PICKETT, Mr. BOEHNER, Mr.

MCCANDLESS, Mr. FIELDS of Texas, Mr. JACOBS, Mr. HAMILTON, Mr.

MACHTLEY, Mr. SWETT, Ms. ROYBAL-ALLARD, Mr. GILLMOR, Mr. HOBSON, Mr. RUSH, Mr. WILLIAMS, Mr. MANN, Mr. PRICE of North Carolina, Mr. MONTGOMERY, Mr. BATEMAN, Mr. HANSEN, Mr. DOOLEY, Mr.

FROST, Ms. DANNER, Mr. INSLEE, Ms. SNOWE, Mr. HAYES, Mrs.

UNSOELD, Mr. KREIDLER, Mr. DURBIN, Mr. BERMAN, Mr. ANDREWS of

Texas, Mr. ROSE, Mr. LIGHTFOOT, Mr. MCDERMOTT, Mr. SANTORUM,

Mr. PAYNE of Virginia, Mr. ANDREWS of New Jersey, Mr. PACKARD, Ms.

PRYCE of Ohio, Mr. CLINGER, Mr. BACHUS of Alabama, Mr. KANJORSKI,

Mr. EVANS, Mr. LIVINGSTON, Mr. TALENT, Mr. BRYANT, Mr. DICKS,

Mr. BORSKI, Mr. MILLER of California, Mr. BREWSTER, Mrs. COLLINS

of Illinois, Mr. WHEAT, Mr. NUSSLE, Mr. BROWN of Ohio, Mr. SAM

JOHNSON of Texas, Mrs. ROUKEMA, Mr. CALVERT, Mr. ROHRABACHER,

Mr. HALL of Texas, Ms. FURSE, Mr. RIDGE, Mr. FINGERHUT, Mr.

DEFAZIO, Mr. ROYCE, Ms. PELOSI, Mr. LEWIS of California, Mr.

SANGMEISTER, Mr. FIELDS of Louisiana, Mr. EMERSON, Mr. KLINK, Mr.

CHAPMAN, Ms. WATERS, Mr. STENHOLM, Mr. ANDREWS of Maine, Mr.

GUTIERREZ, Mr. REED, Mr. FILNER, Mr. MARTINEZ, Mr. STARK, Mr.
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•HR 2443 SC

BAKER of Louisiana, Mr. MCDADE, Mr. DICKEY, Mr. PETE GEREN of

Texas, Mr. LINDER, Mr. TEJEDA, Ms. WOOLSEY, and Mr. MAZZOLI

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’’.

6 SEC. 2. DISPOSITION OF UNCLAIMED DISTRIBUTIONS.

7 (a) IN GENERAL.—The Act entitled ‘‘An Act to in8 crease deposit insurance from $20,000 to $40,000, to pro9 vide full insurance for public unit deposits of $100,000

10 per account, to establish a National Commission on Elec11 tronic Fund Transfers, and for other purposes.’’ and ap12 proved October 28, 1974 is amended by adding at the end

13 of title VI (12 U.S.C. 2501 et seq.) the following new sub14 title:
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1 ‘‘Subtitle B—Disposition of Other

2 Unclaimed Distributions

3 ‘‘SEC. 611. CONGRESSIONAL FINDINGS AND DECLARATION

4 OF PURPOSE.

5 ‘‘The Congress hereby finds the following:

6 ‘‘(1) Banks and other intermediaries hold secu7 rities which are registered in the street name or

8 nominee name of banks or other intermediaries.

9 ‘‘(2) A very small percentage of the dividends,

10 interest, and other distributions made by issuers of

11 securities is unable to be transmitted by the banks

12 and other intermediaries because the intermediaries

13 do not know the identities or addresses of the bene14 ficial owners.

15 ‘‘(3) This small percentage of unclaimed dis16 tributions nonetheless amounts to substantial sums

17 of money annually.

18 ‘‘(4) As a matter of equity among the several

19 States, the States entitled to such unclaimed dis20 tributions should be the State in which the principal

21 executive office of the issuer of such distribution is

22 maintained.

23 ‘‘SEC. 612. DEFINITIONS.

24 ‘‘As used in this Act—
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1 ‘‘(1) ADDRESS.—The term ‘address’ does not

2 include an address which is not within any State.

3 ‘‘(2) BENEFICIAL OWNER.—The term ‘bene4 ficial owner’ means any person who holds an owner5 ship interest in a security and is entitled to receive

6 the economic benefits of ownership.

7 ‘‘(3) DISTRIBUTION.—The term ‘distribution’

8 means the payment of a dividend or interest or any

9 other transfer of money, securities, or value made

10 with respect to a publicly traded security, including

11 a transfer of any ownership interest in such security

12 and any payment of principal with respect to such

13 security.

14 ‘‘(4) HOLDER.—The term ‘holder’—

15 ‘‘(A) means a person in possession of all or

16 part of a distribution who is not the beneficial

17 owner of the security with respect to which a

18 distribution is made, including banks, deposi19 tories, brokerage firms, and other financial

20 intermediaries; and

21 ‘‘(B) includes any State that has taken

22 possession of a distribution under the laws of

23 such State relating to unclaimed property.

24 ‘‘(5) ISSUER.—The term ‘issuer’ means a cor25 porate or governmental entity, including a federally-
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1 chartered or foreign entity, that issues publicly

2 traded equity or debt securities.

3 ‘‘(6) PRINCIPAL EXECUTIVE OFFICE.—For pur4 poses of applying section 613 and 614 with respect

5 to a distribution by an issuer of a publicly traded se6 curity—

7 ‘‘(A) IN GENERAL.—The term ‘principal

8 executive office’ means—

9 ‘‘(i) the office identified as the issuer’s

10 principal executive office in the issuer’s

11 most recent required filing with the appro12 priate Federal regulatory agency during

13 the 12-month period ending on the date

14 immediately prior to the date of payment

15 by the issuer of such distribution; and

16 ‘‘(ii) in the case of an issuer who did

17 not identify a principal executive office in

18 the filing described in clause (i), the office

19 identified as the issuer’s principal executive

20 office in—

21 ‘‘(I) the issuer’s most recent re22 quired filing with the appropriate

23 Federal regulatory agency; or
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1 ‘‘(II) if no filing was required,

2 any other approved filing with the ap3 propriate Federal regulatory agency.

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

5 the case of any issuer which is a State or a po6 litical subdivision of the State, the principal ex7 ecutive offices of the State or political subdivi8 sion shall be deemed to be located within such

9 State.

10 ‘‘(7) SECURITY.—The term ‘security’ means

11 any note, stock, treasury stock, bond, debenture, evi12 dence of indebtedness, certificate of interest or par13 ticipation in any profit-sharing agreement, collateral

14 trust certificate, preorganization certificate or sub15 scription, transferable share, investment contract,

16 voting-trust certificate, certificate of deposit for a se17 curity, fractional undivided interest in oil, gas, or

18 other mineral rights, any put, call, straddle, option,

19 or privilege on any security, certificate of deposit, or

20 group or index of securities (including any interest

21 therein or based on the value thereof), or any put,

22 call, straddle, option, or privilege entered into on a

23 national securities exchange relating to foreign cur24 rency, or, in general, any interest or instrument

25 commonly known as a ‘security’, or any certificate of
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•HR 2443 SC

1 interest or participation in, temporary or interim

2 certificate for, receipt for, guarantee of, or warrant

3 or right to subscribe to or purchase, any of the fore4 going.

5 ‘‘(8) STATE.—The term ‘State’ has the mean6 ing given to such term in section 3(a)(3) of the

7 Federal Deposit Insurance Act.

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

9 ‘‘(a) ESCHEAT TO STATE IN WHICH THE PRINCIPAL

10 EXECUTIVE OFFICES OF THE ISSUER ARE LOCATED.—

11 ‘‘(1) IN GENERAL.—Subject to paragraphs (2)

12 and (3), if—

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

14 of a distribution paid on a security do not con15 tain the last-known address of a beneficial

16 owner of such distribution; or

17 ‘‘(B) the last-known address of a beneficial

18 owner of a security, as contained on the books

19 and records of the holder of such security, is in

20 a State which does not provide for the escheat

21 or custodial taking of any distribution with re22 spect to such security,

23 any distribution for the beneficial owner of the secu24 rity shall be subject to escheat or custodial taking

25 only by the State in which the principal executive of-
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1 fices of the issuer of the security are located to the

2 extent the laws of such State relating to the escheat

3 or custodial taking of unclaimed property authorize

4 the State to take possession of such distribution.

5 ‘‘(2) RECOVERY BY STATE DESCRIBED IN PARA6 GRAPH (1)(B).—If a law which provides for the es7 cheat or custodial taking of any distribution by any

8 State referred to in paragraph (1)(B) is enacted by

9 or otherwise takes effect in such State at any time

10 after any amount of a distribution for the beneficial

11 owner of a security has escheated to or has been

12 taken into the custody of another State pursuant to

13 paragraph (1), the State described in paragraph

14 (1)(B) shall have the right to recover such amount

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

16 beneficial owner) from the other State for disposi17 tion in accordance with such law.

18 ‘‘(3) RECOVERY BY STATE FOR PARAGRAPH

19 (1)(A) DISPOSITIONS BEFORE THE EFFECTIVE DATE

20 OF THIS SECTION.—With respect to the amount of

21 any distribution which—

22 ‘‘(A) but for this paragraph, would be sub23 ject to paragraph (1)(A); and

24 ‘‘(B) escheated to or was taken into the

25 custody of any State before the date of the en-
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1 actment of the Equitable Escheatment Act of

2 1993 pursuant to the laws of such State relat3 ing to the escheat or custodial taking of un4 claimed property,

5 the amount of such distribution (other than amounts

6 paid to a beneficial owner of the security with re7 spect to which such distribution was made) shall be

8 subject to escheat or custodial taking by each other

9 State in the manner provided in paragraph (1).

10 ‘‘(b) ESCHEAT TO STATE IN WHICH THE PRINCIPAL

11 OFFICES OF THE HOLDER ARE LOCATED.—

12 ‘‘(1) IN GENERAL.—Except as provided in sub13 section (c) and subject to paragraph (2), if, in any

14 case described in subparagraph (A) or (B) of sub15 section (a)(1)—

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

17 of a security do not contain the identity of the

18 issuer of such security; or

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

20 issuer of a security is in a State which does not

21 provide for the escheat or custodial taking of

22 any distribution with respect to such security,

23 any distribution for the beneficial owner of the secu24 rity shall be subject to escheat or custodial taking

25 only by the State in which the principal executive of-
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1 fices of the holder of the security are located to the

2 extent the laws of such State relating to the escheat

3 or custodial taking of unclaimed property authorize

4 the State to take possession of such distribution.

5 ‘‘(2) RECOVERY BY STATE DESCRIBED IN PARA6 GRAPH (1)(B).—If a law which provides for the es7 cheat or custodial taking of any distribution by a

8 State referred to in paragraph (1)(B) is enacted by

9 or otherwise takes effect in such State at any time

10 after any amount of a distribution for the beneficial

11 owner of a security has escheated to or has been

12 taken into the custody of another State pursuant to

13 paragraph (1), the State described in paragraph

14 (1)(B) shall have the right to recover such amount

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

16 beneficial owner) from the other State for disposi17 tion in accordance with such law.

18 ‘‘(c) RECOVERIES FOR DISPOSITIONS DESCRIBED IN

19 SUBSECTION (b) BEFORE THE EFFECTIVE DATE OF THIS

20 SECTION.—

21 ‘‘(1) IN GENERAL.—With respect to the amount

22 of any distribution which—

23 ‘‘(A) but for this subsection, would be sub24 ject to subsection (b); and
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1 ‘‘(B) escheated to or was taken into the

2 custody of any State before the date of the en3 actment of the Equitable Escheatment Act of

4 1993 pursuant to the laws of such State relat5 ing to the escheat or custodial taking of un6 claimed property,

7 the amount of such distribution (other than amounts

8 paid to a beneficial owner of the security with re9 spect to which such distribution was made) shall be

10 subject to escheat or custodial taking by each other

11 State in the manner provided in paragraph (2).

12 ‘‘(2) APPORTIONMENT OF RECOVERY.—For

13 purposes of paragraph (1), the amount of any dis14 tribution which is subject to escheat or custodial

15 taking by any State pursuant to paragraph (1) shall

16 bear the same proportion to the total amount of the

17 distribution which is available to all States under

18 such paragraph as the amount which such State is

19 entitled to receive under subsection (a) from the

20 State referred to in paragraph (1)(B) with respect

21 to distributions which are subject to subsection (a)

22 and escheated to or were taken into the custody of

23 such State before the date of the enactment of the

24 Equitable Escheatment Act of 1993 bears to the

25 total amount which all States are entitled to receive
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1 under subsection (a) from the State referred to in

2 paragraph (1)(B) with respect to such distributions.

3 ‘‘(d) DETERMINATION OF IDENTIFICATION AND AD4 DRESSES OF ISSUERS AND BENEFICIAL OWNERS.—

5 ‘‘(1) IN GENERAL.—With respect to any un6 claimed distribution in the possession of a holder,

7 the holder’s determination, after making reasonable

8 efforts (on the basis of prevailing commercial prac9 tices) to review the holder’s books and records, of

10 the identity and address of the beneficial owner of

11 the security for which such distribution was made

12 and of the issuer of such security, shall be prima

13 facie evidence of the information relating to such

14 beneficial owner and issuer for purposes of this

15 subtitle.

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

17 burden shall rest upon any State seeking to contest

18 a holder’s determination in accordance with para19 graph (1) to demonstrate, at the cost of such State,

20 that the books and records of the holder, or other

21 readily available public information sources, identify

22 a different State with a superior right to the dis23 tribution.

24 ‘‘(e) DISTRIBUTIONS IN EVENT OF PRINCIPAL EXEC25 UTIVE OFFICES IN MORE THAN 1 STATE.—If an issuer
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1 or holder identifies principal executive offices in more than

2 1 State, each State identified as the location of a principal

3 executive office shall be entitled to escheat or take

4 custodially on a pro rata basis to the extent the laws of

5 such State relating to the escheat or custodial taking of

6 unclaimed property authorize the State to take possession

7 of a distribution.

8 ‘‘SEC. 614. CHANGES IN PRINCIPAL EXECUTIVE OFFICE

9 DESIGNATION.

10 ‘‘No issuer may change the issuer’s designation of a

11 principal executive office for the sole purpose of altering

12 the entitlement of any State to take custody of property

13 subject to this subtitle.

14 ‘‘SEC. 615. SCOPE OF APPLICATION.

15 ‘‘Section 613 shall apply to all distributions subject

16 to this subtitle without regard to the date on which any

17 such distribution was made by the issuer or whether any

18 distribution was paid over by a holder to 1 or more

19 States.’’.

20 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

21 Sections 602 and 604 of title VI of the Act entitled ‘‘An

22 Act to increase deposit insurance from $20,000 to

23 $40,000, to provide full insurance for public unit deposits

24 of $100,000 per account, to establish a National Commis25 sion on Electronic Fund Transfers, and for other pur-
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1 poses.’’ and approved October 28, 1974 (12 U.S.C. 2501

2 nt., 2502) are each amended by striking ‘‘title’’ and insert3 ing ‘‘subtitle’’.

4 (c) CLERICAL AMENDMENT.—The Act entitled ‘‘An

5 Act to increase deposit insurance from $20,000 to

6 $40,000, to provide full insurance for public unit deposits

7 of $100,000 per account, to establish a National Commis8 sion on Electronic Fund Transfers, and for other pur9 poses.’’ and approved October 28, 1974, is amended by

10 striking the heading for title VI and inserting the follow11 ing new headings:

12 ‘‘TITLE VI—DISPOSITION OF

13 UNCLAIMED DISTRIBUTIONS

14 ‘‘Subtitle A—Disposition of Aban15 doned Money Orders and Trav16 eler’s Checks’’.

Æ