DeCarrera Featured in FinOps Report on Broker-Dealers

Kimberly DeCarreraIn recent months, California has announced two major settlements with financial brokerage firms for unclaimed property liabilities relating to customer accounts. These audits are being conducted by Verus, which also led the efforts for the states against the life insurance companies in recent years. Like the life insurance settlements, the brokerage settlements include matching accounts against the Social Security Death Master File ("SSDMF"). The brokerage settlements also go a step further, requiring companies to search the U.S. Postal Service's National Change of Address databases.

Historically, financial service firms have relied on the SEC standard of two undeliverable pieces of mail to trigger abandonment and potential reporting as unclaimed property. The Morgan Stanley and Charles Schwab settlements highlight the fact that this is no longer acceptable and the need for firms to tailor their systems and processes to individual state requirements, which may differ based on the type of account. FinOps Report, a publication for those in financial operations, technology and compliance, recently reviewed unclaimed property audits and compliance from the perspective of the broker-dealer.

Barganier and Associates' general counsel Kimberly DeCarrera recently spoke with Chris Kentouris to explain what the requirements for broker-dealers are under unclaimed property laws. Holders of unclaimed property need to be able to accurately determine the types of accounts and to apply the myriad of changing state laws and regulations to those accounts. In addition, the vast majority of states require due diligence, and as these settlement agreements spread, more database searches will be required.

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See Also:
Tax Analysts Looks at Unclaimed Property
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Barganier Official Observers for ULC Model Act Drafting Committee