Tuesday, Feb. 7, 2017

Committee Chair David Anderson, [email protected] Committee Vice Chair , [email protected] Rep. Dan Ahlers, [email protected] Rep. , [email protected] Rep. Lance Carson, [email protected] Rep. , [email protected] Rep. , [email protected] Rep. John Lake, [email protected] Rep. , [email protected]

RE: The Unclaimed Property Professionals Organization’s Comments Regarding S.B. 34

Dear Representatives:

The Unclaimed Property Professionals Organization (UPPO) is the national trade association of unclaimed property holders and service providers. We represent over 400 unclaimed property holders and service providers and 1,300 unclaimed property professionals of diverse industries and employer size. UPPO advocates for fairness in unclaimed property laws and regulations, and respectfully submits our concerns with S.B. 34, which requires the South Dakota Unclaimed Property Administrator to liquidate securities within 90 days after escheatment. If enacted, this new requirement will have a devastating effect on owners who are in the unfortunate position of having their securities liquidated without a right to be made whole by the State’s return either of the actual property (securities) that were escheated to it, or of the current full market value as of the claim date. Rather than enacting S.B. 34, which will create issues for South Dakota, holders, and owners, we urge the committee to substitute the 2016 Revised Version of the Uniform Unclaimed Property Act (RUUPA) provisions in place of the current bill’s language.

Revised Uniform Unclaimed Property Act for Consumer Protection The Uniform Law Commission passed and endorsed the RUUPA in July 2016. Included in the RUUPA are sweeping changes related to the escheatment of securities. The language in the RUUPA reflects extensive dialogue and research done by the drafting committee, securities stakeholder groups, and the National Association of Unclaimed Property Administrators. The RUUPA provisions prevent the liquidation of securities for at least three years after the state receives property, and in the event that a shareholder’s securities are liquidated, it allows the owner to be made whole during the period within six years of escheatment. These provisions were intentionally included to protect owners and permit them to maintain their property value. Owners whose securities are expeditiously liquidated by the state will face unintended

tax consequences, lose their right to be made whole, and their business interests, once held through the securities, will be terminated.

Holder Indemnification In addition to the serious harm that this legislation may inflict upon South Dakota residents who own securities, the proposed amendments to Section 1(d) would also create what UPPO presumes are unintended risks for multiple parties. This is because Section 1(d), which is now redlined in S.B. 34, previously protected “…the state, the holder, any transfer agent, registrar, or other person acting for or on behalf of a holder for any appreciation in the value of the property occurring after the delivery by the holder to the administrator.” As UPPO interprets the proposed amendment, S.B. 34 removes the holder’s and its agents’ rights to indemnification against liability on a claim to post-liquidation appreciated property. UPPO encourages South Dakota to reinstitute the protection for all parties named above.

UPPO strongly recommends that the committee consider the serious impact that this bill will have on owners if enacted, and substitute the RUUPA provisions in place of the current bill’s language. Doing so would ensure that holders and owners are adequately protected.

We appreciate your consideration.

Please contact me with any questions or comments regarding the content of this letter.

Sincerely,

Toni Nuernberg Executive Director, Unclaimed Property Professionals Organization 763-253-4344 I [email protected]