Top Court: Bank's Charter State Has Right to Unclaimed Funds
Berry, Robyn Meredith, American Banker
WASHINGTON -- The Supreme Court said Tuesday that unclaimed interest, dividends, and other securities distributions are the property of the state where the depository institution holding them is incorporated.
The decision, in Delaware v. New York, settles a six-year dispute between those states.
The justices reversed the recommendation of a court-appointed special master that unclaimed funds go to the state in which the securities issuer was based. The reversal is a relief to bankers, who feared an administrative nightmare.
Judith Welcom, a partner in the law firm Brown & Wood, said that because one unclaimed account could have 100 different securities in it, banks would have had "to divide the property up into little pieces" and pay small amounts to various states after familiarizing themselves with abandoned-property laws in all 50 states.
Ms. Welcom wrote a friend-of-the-court brief filed by the American Bankers Association, the Securities Industry Association, the New York Clearing House Association, and the Depository Trust Co. …