pen rainbow

Saturday, October 25, 2014

The Saturday Trust—Taking Stock

Dealing with foreign and domestic stocks


I really don't know a helluva lot about stocks.  My dad did.

Navigating a maze of British stock certificates

Questions

Years ago, my dad joined a monthly stock investment club and learned about the market and how to invest in it wisely.

Unfortunately, I had no idea what I was looking at last December when I turned the key to the trust safe deposit box and pulled out a stack of aged stock certificates.  I knew that they were important enough for my dad to keep them in the box with his other important papers, but I really did not understand what I was looking at.  At first glance, I thought that he'd kept them for records purposes, which turned out to be...mostly correct.

I did not realize it then, but I was looking at nearly a year's worth of financial forensic work on these certificates.  More than any other aspect of closing the trust, these stock certificates have taken the most time to resolve.

Did they have value or were they worthless pieces of paper kept for some other reason?  Was Scottish Power the same as Scottish and Southern Energy?  (Turns out, no.)  I'd never heard of these companies, and some of them were no longer in existence.

Why didn't he leave a note explaining their meaning and significance?  And, why were there so many of them?  Most of the certificates were decades old, and there was no apparent order to them.  It had been almost four years since I'd seen the contents of the safe deposit box, and I had no memory of them.  Furthermore, it would have been out-of-character for my dad to leave leftover British stocks unresolved when he had been so meticulous about consolidating all of his personal finances.  What the heck was going on?

Note to future self:  If I ever set up a bank safe deposit box, include an inventory log and a short description of everything in the  safe deposit box.

Answers

FIGURING THINGS OUT

In January, I began to unravel the meaning of these documents.  I started with Wikipedia and tracked down the history of each company.  Fortunately, there is a ton of useful information online when it comes to researching the history of companies.  I still wasn't sure how many companies I was actually dealing with because as corporations merge, some are incorporated into the parent company, while others retain their  separate identities as subsidiaries.

It took me about a month to grok the fact that the name of the company on the certificate is not the same as the shareholder group.  Publicly traded companies have shareholder groups who manage all of the share transactions.  Three of the stocks were managed by the British shareholder group, Capita Registrars; one was with Equiniti UK (another British management group), and the other had no shareholder group at all.  All of its public shares had been sold, and the unclaimed monies were deposited and held in the national trust...as in Her Majesty's National Trust.  Altogether, I was dealing with five British stocks.  One way or the other, I had to resolve each one.

To complicate matters even more, I figured out that my dad still had an open bank account at Barclay's Bank in England where the dividends from two of the stocks were being deposited twice a year.  Holy crap, now I had to deal with active British stocks that were earning dividends!  More questions...Had he paid the taxes on the dividends?


OVERSEAS CORRESPONDENCE

By the end of January, I had email contacts, and I knew who to contact.  I got an email response from only one shareholder group with one of the stocks.  The others, not so much...

•  One shareholder group just didn't feel like responding until I sent an actual letter.

•  Another didn't respond until I sent a letter to the wrong shareholder group, who then wrote me back and told me which group to contact.

•  It took me a while to track down the national trust info, but I managed to get the ball rolling after several emails with a rep from the company who took over the original stock.

•  By the time that I got to the last stock certificate, I knew the drill.  Check shareholder websites for information about deceased shareholders.  This is a good place to start because most companies post this info, but it is not always easy to find.  Look for links to "shareholder information" or "shareholder services."  Search for "deceased shareholder" on the website.

When it comes to stock certificates, everything is communicated by post, as in the actual mail.  In other words, forget about email and correspondence by phone.  To start with, written correspondence is the only credible and acceptable method used with shareholder groups.

After you've requested and returned a Small Estates Indemnity packet to confirm your identity as the Executor of Estate, then you can register a new online account through the shareholder's "portal."  That will give you limited access to the shareholdings.  "Limited" meaning that you can manage your shareholder info, but you can't sell the shares online unless you live in the UK...which I don't.  You can also calculate the value of your holdings online.


FIRST THINGS FIRST

Research the name of the stock online and find out who the correct shareholder group is.
  1. Initiate first contact with an email.  If there is no contact link, find an address on their website under "About" or "Contact Shareholder Services," and write them a short introductory letter, including the certificate number, the name of the deceased and the issue date.
  2. Don't jump the gun on calculating the value of the shares.  You'll probably be disappointed.  You won't know exactly how many shares are valid until you complete the Small Estates process with the shareholder group.  The shareholder group will authenticate your EOE status as Executor of Estate and confirm the number and value of the certificates. 
  3. Manage only one or two stocks at a time.  It can get confusing to keep track of more than a couple of shareholder groups at a time.   
  4. Do not procrastinate!  Foreign stocks take much longer to administer because of the turn-around response time.

FOREIGN CURRENCY

Never send US currency checks to UK shareholder groups.  The good news is that US banks (like Wells Fargo) can issue bank drafts in foreign currency.  The not-so-good news is that there is usually a hefty fee of $30 when they do the conversion and a $5 fee if you want to deposit it back into an American account.

Also, I found out that there is a big difference between a lowercase "p" (pence) and an uppercase "P" (pounds).  If there is a "p" next to the price per share on your certificate, and you've got 50 shares, you have to do a currency conversion from pence to pounds, then from pounds to dollars.  Don't assume that little "p" is pounds sterling.


DONATING & SURRENDERING SHARES

After you've submitted a Small Estates packet with the shareholder group (this costs around £80, or around $136 USD depending on the exchange rate + a $30 bank draft fee), the shareholder group will confirm the number of shares and their value per share.  You can then decide if the value is worth pursuing any further.  Factor in the cost of postage and other processing fees, as well as the time that you have left to close the trust.  The expenses add up quickly, and you may find that the cost of pursuing a new stock certificate exceeds its value.

When this happens, it is not uncommon for individual shareholders to donate shares.  Search for a link to a donation site on the shareholder website.  Share Gift is one example, and it's a great way to bring things to a close when it comes to closing up a stock issue.


SELLING SHARES

My Experience
Four out of the five mysterious British stock certificates turned out to be of little or no value.  They had been sold, paid out, or reduced to so few shares that they were not worth pursuing.  I managed to get one of the stocks transferred into my name, a new certificate was issued, and the next step was to sell the shares.

This is a job for a knowledgable foreign stock trading broker with an American brokerage firm that can sell the shares.  Fidelity and Schwab can both sell foreign stock.  Look for a link to the foreign stock trading team on the brokerage firm's website.  It's easier just to give a broker the low-down over the phone, so don't be afraid to call and ask about selling a foreign stock.

Once you get past that hurdle, the stock certificate may need to be given a CUSIP.  What's a CUSIP, you ask?  If you want to trade securities in the US or Canada, the certificate will need a 9-character alphanumeric code that identifies it as a legitimate financial security.  This can be done at your local brokerage branch, and it takes 1-3 days to process.  A broker at the branch will tell you if your certificate needs a CUSIP.  Chances are, it will if it's traded solely on a foreign stock exchange.

Then, you'll need to submit the necessary forms and the original stock certificate to the brokerage branch.  To make sure that you have the proper forms, ask the foreign trading broker to help you download the paperwork.  You'll need a stock transfer form, a CREST transfer form, and a Certificate of Release Request.  Fill them out as directed by the foreign stock trading broker.  Then, give the forms and the stock certificate to your local branch broker.

The stock will show up as a "Type 4 Asset" in your brokerage account.  This means that it cannot be traded until you get a green light from the brokerage firm after they've done their research to confirm that the shares can be sold.  This can take 15 to 20 days...or less.

Beyond this, I can't tell you if I was able to sell my British shareholdings.  

I'm waiting for Fidelity to tell me that it's okay to go ahead.  Then, I think that I'll need to submit a Letter of Instruction to the nice folks at my local Fidelity branch, then they can sell the shares.  Technically, I'm not sure if I sell them or if they sell them, but their fee is $7.50 for the transaction.

Wish me luck!!

(P.S.  The taxes on the stock dividends were paid.  Thank you, Dad!)