[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3997 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 3997

 To improve systems for the delivery of dividends, interest, and other 
           valuable property rights to lost security holders.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 15, 2000

  Mrs. Wilson (for herself, Mr. Kasich, and Mr. Oxley) introduced the 
following bill; which was referred to the Committee on Commerce, and in 
    addition to the Committee on the Judiciary, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
 To improve systems for the delivery of dividends, interest, and other 
           valuable property rights to lost security holders.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Money Return Act of 2000''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The intent and purpose of Federal securities law is to 
        protect the general investing public and to make the regulation 
        and control required by national public interest reasonably 
        complete and effective.
            (2) The United States Securities and Exchange Commission 
        has acknowledged that there are millions of lost security 
        holders in the United States, who are, thereby, deprived of the 
        benefit of their investments valued by the Commission in the 
        hundreds of millions of dollars.
            (3) The Commission's current regulations relating to lost 
        security holders apply only to recordkeeping transfer agents 
        who handle approximately half of all security holders, thereby 
        denying the same benefits to the other half.
            (4) Available technologies can locate 80 percent or more of 
        corrected addresses for security holders, who have not received 
        the benefit of the dividends and interest earned by their 
        securities and other valuable property rights.
            (5) The Federal Government, through its agencies, holds 
        large sums of money owed to others, who cannot reasonably 
        obtain their money, because of a lack of information about 
        these sums and how to claim them.

  TITLE I--RESPONSIBILITIES OF THE SECURITIES AND EXCHANGE COMMISSION

SEC. 101. ADDITIONAL RESPONSIBILITIES TO SECURE DELIVERY OF DIVIDENDS, 
              INTEREST, AND OTHER VALUABLE PROPERTY RIGHTS.

    Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1) is amended by adding at the end the following new subsection:
    ``(g) Due Diligence for the Delivery of Dividends, Interest, and 
Other Valuable Property Rights.--
            ``(1) Due diligence obligation.--Each issuer of any 
        security registered pursuant to section 12 of this title shall 
        exercise due diligence in delivering dividends, interest, and 
        other valuable property rights to their owners, whether such 
        dividends, interest, or other valuable property rights are 
        delivered by any issuer or on behalf of any issuer by any 
        paying agent.
            ``(2) Revision of regulations required.--The Commission 
        shall amend the provisions of section 240.17Ad-17 of the 
        Commission's regulations (17 C.F.R. 240.17Ad-17) as in effect 
        on December 8, 1997--
                    ``(A) to extend the application of such section to 
                all such paying agents, including the obligation to use 
                database searches as required of transfer agents; and
                    ``(B) to extend the application of such section to 
                security holders who became lost security holders 
                before such date.
            ``(3) Notices.--
                    ``(A) Notice on checks or other valuable property 
                rights to security holders.--Any check or notice to any 
                security holder who has failed to cash or deposit a 
                previous check for any dividend or interest payment or 
                has failed to process a valuable property right as 
                instructed shall bear a printed notice to the effect--
                            ``(i) if a check or other valuable property 
                        right has been sent to a security holder, and 
                        the check or other valuable property right has 
                        been returned to the sender, the security 
                        holder is considered a `lost security holder' 
                        whenever that expression is used by the Unites 
States Securities and Exchange Commission; and
                            ``(ii) if a check or other valuable 
                        property right is sent to a security holder, 
                        and the check is not negotiated within 7 months 
                        or the other valuable property right is not 
                        processed as instructed within 7 months, then 
                        that security holder shall be considered a 
                        `lost security holder' and shall be treated in 
                        the same way as lost security holders are 
                        treated under subparagraph (A).
                    ``(B) Notices on subsequent communications.--If the 
                lost security holder (as defined in subparagraphs 
                (A)(i) and (A)(ii)) is to be sent another regularly 
                scheduled communication, including a dividend or 
                interest check, then that next communication shall 
                notify the security holder--
                            ``(i) that a previous check or valuable 
                        property right has been returned to the sender 
                        or has not been negotiated or processed as 
                        instructed, and such notice shall request the 
                        security holder promptly to negotiate the 
                        received check or process the received valuable 
                        property right as instructed; and
                            ``(ii) that if such check or other valuable 
                        property right has not been received by the 
                        security holder, then the security holder 
                        should call the sender at the toll free number 
                        in the notice or should write or otherwise 
                        contact the sender at the address or addresses 
                        in the notice.
                In no event shall the next regularly scheduled 
                communication occur longer than 7 months after the 
                original sending.
                    ``(C) Exceptions.--Paying agents may exclude from 
                the search requirements any lost security holder when 
                the value of all dividend, interest, or other valuable 
                property rights due to the security holder plus the 
                value of all assets listed in the lost security 
                holder's account is less than $25.
            ``(4) Listing of lost security holders.--The Commission 
        shall establish, or provide for the establishment by others, of 
        a database that is accessible from the Internet and that 
        contains a list of the names of persons who are lost security 
        holders, the names of those issuers or paying agents who are 
        obligated to deliver to them their dividends, interest, and 
        other valuable property rights, and, in the case of paying 
        agents, the identity of the issuer. The database and Internet 
        site shall be created or caused to be created by the Commission 
        in accordance with such procedures as the Commission shall 
        prescribe by rule, regulation, or order.
            ``(5) Interest on unpaid amounts; trust for security 
        holders.--Any amounts to which security holders are entitled 
        shall be held in trust by any issuers or any paying agents for 
        the benefit of the security holders. Interest on the amounts 
        held in trust shall--
                    ``(A) accrue for the benefit of an issuer or its 
                paying agent as provided for by agreement between them 
                for the first 6 months after the return of any 
                undelivered dividend or interest payment or 7 months 
                after a payment has been sent but remains uncashed;
                    ``(B) accrue for the benefit of the security 
                holders beginning 6 months after the return of any 
                undelivered dividend or interest payment or 7 months 
                after a payment has been sent but remains uncashed; and
                    ``(C) end upon the delivery as escheated or 
                unclaimed property to a State pursuant to State law.
            ``(6) Use of professional search firms.--
                    ``(A) No lost security holder shall be turned over 
                to a professional search firm for locating until after 
                two database searches have been conducted, regardless 
                of whether the security holder was deemed `lost' 
                before, on, or after December 8, 1997.
                    ``(B) The issuer or its paying agent shall solicit 
                competing bids for locating lost security holders in 
                accordance with such procedures as the Commission shall 
                prescribe by rule, regulation, or order. Any successful 
                bidder shall report to the issuer, its paying agent, 
                and the Commission the number of accounts pursued, the 
                percentage of accounts recovered, the amount and 
                percentage of funds recovered, the names of those who 
                recovered, and the gross and net amounts each received.
            ``(7) Liability.--Any issuer or paying agent that fails to 
        exercise due diligence in accordance with the requirements of 
        this subsection shall be liable to any lost security holders or 
        class of lost security holders for damages. If the court 
        determines that such failure constitutes gross negligence or 
        wanton misconduct, the court may award punitive damages in an 
        amount equal to triple the amount of such damages. An action 
        under this paragraph may be brought in any Federal court of 
        competent jurisdiction.
            ``(8) Regulations; report.--The Commission shall--
                    ``(A) adopt such rules, regulations, and orders 
                necessary to implement this subsection no later than 3 
                months after the date of enactment of this subsection;
                    ``(B) provide a report to Congress concerning its 
                progress toward implementation of this subsection no 
                later than 6 months after such date of enactment; and
                    ``(C) thereafter include in its annual report 
                similar information.
            ``(9) Definition of paying agent.--For purposes of this 
        subsection, the term `paying agent' includes any issuer, 
        transfer agent, broker, dealer, investment company, mutual 
        fund, investment adviser, indenture trustee, custodian, or any 
        other person obligated to deliver dividends, interest, or 
        valuable property rights.''.

            TITLE II--UNITED STATES MONEY RETURN COMMISSION

SEC. 201. ESTABLISHMENT.

    (a) In General.--There is established the United States Money 
Return Commission. The Commission shall be composed of 5 members 
appointed by the President.
    (b) Chairman.--The President shall designate a Chairman from among 
the members of the Commission.
    (c) Terms.--Each member shall serve for a term of 5 years, except 
that from the first 5 appointees, one shall serve for 1 year, one shall 
serve for 2 years, one shall serve for 3 years, one shall serve for 4 
years, and one, the chairman, shall serve for 5 years.
    (d) Limitation.--No more than 2 members shall be appointed who are 
employees of the United States of America or any of its agencies.

SEC. 202. FUNCTIONS.

    (a) In General.--The Commission shall--
            (1) collect and publish on the Internet and other 
        appropriate media information on all money held by the United 
        States that is owed to any person or entity; and
            (2) establish procedures for the use of state-of-the-art 
        technology to restore such moneys to their rightful owners 
        without charge.
    (b) Report.--The Commission shall report on its activities to the 
President not later than 1 year after the date of the enactment of this 
Act, and annually thereafter.

SEC. 203. ADMINISTRATION.

    (a) Information From Executive Agencies.--The heads of executive 
agencies shall, to the extent permitted by law, provide the Commission 
such information as it may require for the purpose of carrying out is 
functions.
    (b) Pay.--Members of the Commission shall serve without any 
additional Federal compensation for their work on the Commission. 
However, members appointed from among private citizens of the United 
States may be allowed travel expenses, including per diem in lieu of 
subsistence, as authorized by law for persons serving intermittently in 
the government service (5 U.S.C. 5701-5707), to the extent funds are 
available therefor.
    (c) Staff.--The Commission shall have a staff headed by an 
Executive Director. Any expenses of the Commission shall be paid from 
such funds as may be available to the Secretary of the Treasury.
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