website/compliance/team/lost-investor-searches.html at ee725d7cc9ae09a4bc04a61275fd010266328533 · blocktransfer/website · GitHub

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
<!DOCTYPE html>
<html lang="en">
<head>
  <meta charset="UTF-8">
  <title>Locating Missing Securityholders</title>
  <link rel="stylesheet" type="text/css" href="../../style.css">
</head>
<body class="conditions">

  <h2>Unresponsive or Lost User Policy</h2>

  <div>
    <h2>Purpose</h2>
    <p>This policy ensures compliance with SEC Rule 17Ad-17, establishing our procedures for identifying and locating
      lost securityholders and unresponsive payees. It outlines our reasonable efforts to maintain contact with
      securityholders and to fulfill our obligations as a recordkeeping transfer agent or paying agent.</p>

    <p>We sincerely appreciate certain global securities regulations which prioritize physically locating a shareholder. These legacy rules solve material challenges related to investors’ unclaimed property and assets at risk of forfeiture due to State regulations. Nobody wins when checks go uncashed for years.</p>

    <p>However, TAD3 specifically obviates much of the trouble in paying investors. And email handles most concerns around shareholder communications. Accordingly, we employ a unique methodology for labeling and identifying lost investor accounts, especially for impoverished citizens abroad.</p>

    <h3>Chief Concerns</h3>
    <ul>
      <li>Certain demographics of investors (outside the United States) may have difficulty maintaining a regular physical address, resulting in unreliable payment services. One of our first twenty investors was homeless and used a friend’s or family member’s address.</li>
      <li>Global postage can be expensive and materially unreliable. Even if mail arrives untampered, local financial infrastructure may be absent.</li>
      <li>Addresses change frequently. Given primarily digital communications, errors might not be discovered for years—wasting imperative time when they are.</li>
    </ul>

    <h3>Identification Metrics</h3>
    <p>Accordingly, we employ a more permanent addressing scheme that defers largely to a user’s public key.</p>
    <p>On-chain activity related to this public key counts as activity and investor response. This activity is generally defined as signing and broadcasting a cryptographically-valid Stellar message.</p>

    <h4>Defining Lost</h4>

    <h5>Digital or Physical</h5>
    <p>Absent activity for three years, we will email the owner of an account to confirm continued engagement. This restarts the clock on treating an onboarded wallet as potentially lost.</p>
    <p>If we do not receive a response, we will send a physical letter after 60 days. If the email bounces, we will confirm the bounce by letter within 3 days. If undeliverable or unacknowledged within 60 more days, the user is marked as lost.</p>
    <p>We follow this same process when an investor email returns with a permanent SMTP error. For temporary failures, we attempt three follow-up messages spaced out in time.</p>

    <h5>Lack of Account</h5>
    <p>We consider a shareholder lost if they lack both of the following for 90 days:</p>
    <ul>
      <li>Wallet address</li>
      <li>Physical address</li>
    </ul>
    <p>In such cases, we will reach out using the only identifier—usually an email. If no email is available, we send physical mail prompting them to open a wallet, when feasible.</p>

    <h3>Search Process</h3>
    <p>Team members follow federal guidelines to search for investors on a case-by-case basis, depending on:</p>
    <ul>
      <li>Issuer knowledge of investors</li>
      <li>History of lost account behavior</li>
      <li>Parties related to such users based on personal data</li>
      <li>Any combination deemed prudent by the team member</li>
    </ul>

    <p>These procedures align with 17 C.F.R. § 240.17Ad-17(b).</p>

    <h2>Procedures</h2>

    <h3>Locating Lost Securityholders</h3>
    <ol>
      <li>
        <strong>Database Search Requirement:</strong>
        <ul>
          <li>Conduct two (2) database searches free of charge:
            <ul>
              <li>First search: Within 3 to 12 months after mail is returned undeliverable.</li>
              <li>Second search: Within 6 to 12 months after the first search.</li>
            </ul>
          </li>
        </ul>
      </li>
      <li>
        <strong>Search Methods:</strong>
        <ul>
          <li>Use TIN if available, with a third-party search service covering at least 50% of the U.S. adult population, searchable by TIN or name, and updated quarterly or more.</li>
          <li>If only an email address is available, search will be conducted using prominent internet data providers, such as RocketReach, to locate updated contact information.</li>
          <li>If deemed prudent, other non-covered services or online tools may be used so long as results are comparable. No fees may be charged to the investor before both mandated searches are completed.</li>
        </ul>
      </li>
      <li>
        <strong>Optional Search Exemptions:</strong>
        <ul>
          <li>The securityholder is confirmed deceased.</li>
          <li>The aggregate account value is under $25.</li>
          <li>The securityholder is not a natural person.</li>
        </ul>
      </li>
    </ol>

    <h3>Paying Services</h3>
    <ul>
      <li>If acting as paying agent or receiving funds for distribution:
        <ul>
          <li>Disburse funds to investor wallets in stablecoin format.</li>
          <li>If no wallet is on file, send to the linked bank account.</li>
          <li>If no bank account, mail a paper check.</li>
          <li>If no mailing address is available, mail to their last known physical address.</li>
        </ul>
      </li>
      <li>If assistance is needed converting stablecoins to fiat:
        <ul>
          <li>Consult the investor about available off-ramps.</li>
          <li>Help convert stablecoin into a format they can use.</li>
          <li>Proceed with legacy banking payment upon conversion.</li>
        </ul>
      </li>
    </ul>

    <h4>Traditional Interpretations</h4>
    <p>We also deem an account lost if:</p>
    <ul>
      <li>Mail has been returned as undeliverable with no updated address.</li>
      <li>A check remains uncashed for 6 months or longer.</li>
    </ul>

    <h3>Physical Notifications</h3>
    <ul>
      <li>Within 7 months of issuing a check that remains uncashed, we shall notify the payee in writing.</li>
      <li>This notice may accompany future checks or mailings. If under $25, team members may opt to suspend notification while exploring other methods.</li>
    </ul>

    <h3>Recordkeeping Compliance</h3>
    <p>Team members maintain internal records in the “Lost Investor Searches” WorkDrive team folder, including:</p>
    <ul>
      <li>Returned mail and re-sent correspondence</li>
      <li>Database search attempts and outcomes</li>
      <li>All written notices to unresponsive payees</li>
    </ul>
    <p>
      These records are retained per Rule 17Ad-7(i). Each search must be documented with clear, comprehensive screenshots or generated reports that include the search date, search terms, and U.S.-based personal identifiers.
    </p>

    <h3>Escheatment</h3>
    <p>This policy operates in tandem with, but does not override, any applicable state escheatment laws.</p>

    <h2>Review and Updates</h2>
    <p>This policy is reviewed at least annually or in response to regulatory changes.</p>
  </div>

</body>
</html>