By: AnnaMarie Mock, CFP®
Rummaging around your stuffed filing cabinet, you come across a stock certificate. A glint of excitement enters as you think about the potential value of this forgotten relic.
It is not uncommon to stumble upon an old stock certificate in its physical form. There are steps to take to research if the old stock certificate is worthless or if it is a lottery ticket.
The certificate may still be valuable even if the company name on the certificate is no longer trading. The company name is one of the most critical pieces of information because if the company is still active, you can contact the company directly to obtain information. Usually, the CUSIP, an identifying number for the security, would be required for the lookup.
Another way to learn about the certificate and company is to contact the transfer agent printed on the certificate. The transfer agent is a trust company, bank, or financial institution assigned by the company to maintain and record the financial records and transactions for the investors.
However, there may have been mergers that changed the original name or bankruptcies since the issue. This can be a bit more challenging due to the complexity and opacity of corporate restructuring processes, making it difficult to trace back to the original entity. Additionally, records of these changes are not always readily accessible or well-documented in public databases.
Finding the Transfer Agent
You may be able to find the current transfer agent for a stock certificate with the following:
SEC Filings: Check the SEC's EDGAR database for recent filings by the company. These documents often include information about the transfer agent.
Common Transfer Agents: Contact primary transfer agents like Computershare, Broadridge, and AST Financial. These companies handle many public companies' stock transfers and can confirm if they manage the company's records.
Corporate Records through State Corporation Commissions: Each stock is incorporated in a state and is generally recorded through the Secretary of State. Check with the state corporation commission or similar regulatory body where the company was incorporated. They may have records of mergers and current corporate filings.
Stock Certificate Research Services: Consider using a professional service that specializes in researching old stock certificates. These services can track down current transfer agents and corporate status.
Brokerage Assistance: They may have access to historical data and can help identify the current transfer agent. They may have access to historical data and can help identify the current transfer agent. Most brokerages can use the CUSIP to uncover any reorganizations or name changes that may have occurred throughout the company's history. A new number is assigned whenever a security changes names, splits, or other activities.
Despite the challenges posed by the complex and sometimes opaque nature of corporate restructurings, thorough research and persistence can reveal whether the old stock certificate holds financial value or is a collectible piece of corporate history.
What to Do If the Certificate Is Worthless
If the certificate turns out to be worthless, you still have several options to consider. The certificate may hold historical or collectible value, known as scripophily. Collectors often seek out old and rare certificates, especially those with intricate designs or significant corporate histories so that you might sell them to a collector or through a scripophily dealer. Documenting your research and findings is also good, as corporate statuses can change over time.
When the stock is worthless, it also provides the opportunity to capture a loss to offset gains in the future. The stock can be sold easily when the company is still in business and generates a tax document, Form 1099, to be reported on your tax return. It can be more complicated when the position has not been sold and the stock becomes unsellable. This usually happens if the company goes bankrupt. To abandon the investment and claim your loss, the security gets reported on Form 8949 and then captured on Schedule D. Working with a trusted accountant and CERTIFIED FINANCIAL PLANNER™ is recommended to document any losses properly.
What to Do If the Certificate Is Valuable
If the certificate is valuable, the next steps involve verifying and potentially claiming its value. First, contact the transfer agent or brokerage firm to initiate the process of converting the physical certificate into an electronic format. This process, known as "dematerialization," involves transferring the stock to a brokerage account, allowing for easier management and potential sale. Ensure you have all necessary documentation, such as the original certificate, identification, and any related paperwork. Consult with a financial advisor to understand the shares' current market value and explore the best options for managing or selling the stock. Keeping detailed records of all communications and transactions related to the stock certificate is also essential.
Conclusion
In conclusion, whether your old stock certificate turns out to be a valuable asset or a charming piece of history, uncovering its worth is an exciting journey. You can determine its value by diligently researching the company's status, contacting transfer agents, and utilizing professional services. If it holds financial worth, take the necessary steps to realize its potential. If not, appreciate it as a unique collectible that connects you to a piece of financial history. Either way, your discovery is a fascinating reminder of the ever-evolving business and investment world.
AnnaMarie Mock is a CERTIFIED FINANCIAL PLANNER™ and Partner at HIGHLAND Financial Advisors, LLC, a Fee-Only financial planning firm that offers comprehensive financial planning, retirement planning, employer retirement planning, and investment management. AnnaMarie graduated from Montclair State University with a degree in finance and management and successfully passed the CFP® national exam in 2016. She has been working at Highland Financial Advisors since 2013 as a fee-only, fiduciary Wealth Advisor and is a member of NAPFA.