Lost Stock Certificate Surety Bond

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If you lose your stock certificate, there is no need to panic. Even without the certificate, you still own the shares. Most, if not all, stock certificates issued today are in registered form. This is contrary to bearer form. When a stock is in bearer form, the only proof of the stock is the certificate itself. This is very rare and would make it nearly impossible to issue a lost stock certificate bond. This bond is a type of surety bond. So what is a surety bond? A surety bond is a legally binding contract between three parties: the principal, the obligee, and the surety. The principal is the person who is getting the bond. The obligee is the person who is protected by the bond. The surety is the company that guarantees that the principal will fulfill their obligations under the bond. These obligations depend on what type of bond it is and what its purpose is. The important distinction here is that a surety bond is not insurance. The bond is in place to protect the obligee (in the case of the lost stock certificate bond, the obligee is the transfer agent and the company that issued the stock certificate).

Contact the Transfer Agent

To replace a lost stock certificate, you will need to contact the transfer agent and file a lost certificate report. The transfer agent will then place a stop transfer on the certificate. Most transfer agents are banks or trust companies. Sometimes a company acts as its own transfer agent. You can usually find the contact information of the transfer agent by visiting the website of the company in which you own the stock. If the information is not available on the website, contact the firm’s investor relations department.

A transfer agent is a trust company, bank, or similar institution assigned by a corporation for the purposes of maintaining an investor’s financial records and tracking each investor’s account balance. The transfer agent records transactions, cancels and issues certificates, processes investor mailings, and handles a host of other investor problems, including reissuing lost or stolen certificates. The lost stock certificate bond will name both the transfer agent and the issuing company as obligees.

Transfer agents work closely with registrars to ensure investors receive their due interest and dividend payments in a timely manner. Transfer agents likewise oversee the mailing of monthly investment statements to mutual fund shareholders.

Steps to Follow to Replace a Lost Stock Certificate

1. First you must notify the transfer agent of the loss. The transfer agent will place what is called a “stop transfer” on the certificate. This is to prevent others from cashing it in.
2. The transfer agent or the broker-dealer will then notify the SEC of the lost or missing certificates.
3. A lost instrument bond for a stock certificate is required by the issuing company when a stock certificate has been lost or misplaced. The lost stock certificate bond is required by the transfer agent. It is a third-party guarantee that if the transfer agent suffers a financial loss because it replaced the lost stock certificate the surety company will pay out to make them whole again.

Personal indemnity is usually required. The applicant agrees to hold the surety harmless is there is  claim on the lost stock certificate bond, is almost always required for this type of bond. About the only way that there could be a loss on this type of bond is a fraudulent transaction. The principal (party requiring the bond) through malfeasance and in conjunction with a person or personas at the transfer agency, figure out a way to defraud the system and a claim is made. As such, while personal indemnity is usually required, it is a very low risk proposition for the principal.  Other underwriting requirements may include verification of personal assets. This is usually only required for very large bonds or in cases where the principal has challenged credit.

“We were very pleased with the efficiency and knowledge put forth by Surety1. We tried 5 other bond companies before we could get the required bond to replace a stock that my husband had lost 33 years ago. Without your help we probably would not have gotten the stock replaced and our brokerage firm was informed of your ability to come through in a difficult situation.” W.H

The lost stock certificate bond is fairly easy to obtain—all we need is a completed application.  Most transfer agents charge 3% or more for this type of bond. Get your quote form Surety1 and save money.  The bond amount is based on the value of the securities on the day the transfer agent issued the stop transfer. Obtaining your bond via surety1.com will save you money. The transfer agent will usually provide you with a quote for this bond. You are under no obligation to use the transfer agent’s bond option.

How do I Apply for a Lost Stock Certificate Surety Bond? 

At surety1.com we make it simple to obtain your bond:

1. Simply complete our easy to navigate and secure, online application. You will have the opportunity to upload the letter from the transfer agent indicating that you need a surety bond, or you may fax it or email it to your agent.
2. Review your free, no obligation quote from one of our surety bond professional agents.¹
3. Sign some paperwork and make payment (All major credit cards and ACH are available).

Once these steps have been completed, your bond will be shipped to you for an original signature. You will then forward the bond to the transfer agent.

^{1-Occasionally, depending on the specific circumstances, the underwriting company (surety) will request additional information or clarification(s).  If you encounter any questions along the way, our agents are available to take your call, Monday – Friday, 8am to 4:30pm pacific time at (877)654-2327, or email [email protected].}

The bonds are usually open penalty. Open penalty bonds mean that the amount of the bond will automatically increase if the value of the stock increases. This is to protect the transfer agent in case the stock price goes up. The premium (amount you will pay for the bond) will be based on the value of the stock at the time the stop notice is issued by the transfer agent. The premium is due one time only, at the time of issuance (there is no renewal required).

Surety1.com is a service of AssuredPartners , one of the largest and fastest growing insurance agencies in the nation. Since 2003, Surety1 is the premier online provider of surety bonds nationwide and maintains an A+ rating from the Better Business Bureau.