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Information > Financial Terms > This page Care of Securities There
are two principal means to provide for the safekeeping of securities:
renting a safe deposit vault or box; and placing them under the
custodianship of a bank or trust company.
In the former arrangement the securities remain under the depositor's
exclusive supervision and control, while in the latter they are in a bank
or trust company's custody but always immediately available and subject
to the orders of the owner. There
has been no known instance of loss of securities deposited in a safe deposit
vault where the depositor has a covering contract.
Modern construction of safe deposit vaults offers too many obstacles
for the operations of even the most scientific burglars.
For all practical purposes these vaults are fire, water, burglar,
and mob proof. No such guarantees
are provided by ordinary office safes, some of which even fail to provide
for protection against fire. Wherever
securities may be kept, the holder should make a detailed descriptive
record to include number, denomination, name of issue, date of issue,
due date, name of issuing organization, and name of person to whom issued,
if any. In case of loss, theft,
or destruction by fire or other cause, means are then available whereby
the securities may be identified, recovered, or replaced.
If securities are deposited in a safe deposit box or held in custody
by a bank or trust company, this list will be useful and perhaps save
trips to the bank when the depositor wishes to know dividend or interest
dates, or numbers in case bonds are called for previous redemption. Registered
bonds offer means of protection against loss since interest and principal
are payable only to the person in whose name the bonds are registered
on the books of the issuing organization.
Notice of loss, however, should be made promptly in order to prevent
assignment and transfer. There
is no way of protecting the owner of coupon bonds in case of loss, although
quick action and cooperation with the Treasury Department or Federal Reserve
bank sometimes leads to the recovery of lost government bonds.
In case these bonds are lost, the owner should immediately notify
the Secretary of the Treasury in Washington and Federal Reserve bank of
his or her district, giving a full description.
The same notification should be sent in case of loss of registered
bonds. Upon satisfactory proof
of loss and the filing of an indemnity bond, a duplicate will be issued.
Duplicates for coupon or registered bonds destroyed, wholly or
in part, or so defaced as to impair their value to the owner, will be
issued upon fulfilment of the requirements of the Secretary of the Treasury,
including the filing of an indemnity bond. In
case stocks are lost or stolen, notify the issuing corporation and place
a STOP TRANSFER ORDER with its transfer agent. In
case of loss of a municipal bond, notify the treasurer of the municipality
and the distributing investment banking house.
If a corporation bond is lost, notify the treasurer of the corporation.
If a real estate mortgage is lost, notify the attorneys who executed
it. One purpose of recording
acts is to preserve on public file the evidence of real estate conveyances,
including mortgages. |