Worthless Account Positions

[antelopedundee]

I have an old account position that is essentially worthless. My brokerage advises that there would be a $500 fee to remove it from my account. If I was to withdraw all funds and close the account would they try to withhold $500?

BTW I first contacted them in Sept of 2017.

 

[SAJ-99]

Don’t know the details but that sounds like bull-shitt. Tell them you will report it to FINRA and everyone can solve it through arbitration. See if that motivates them.

 

[NYSKIER]

That makes no sense to me either, what’s the harm in just leaving it, are you trying to get beck 50 bucks?

 

[antelopedundee]

I asked several years ago and was told it would be $500 to have it removed. So yesterday I looked into my old messages and found that there is a form one would need to fill out and submit to request removal.
From the form.

Worthless — This term is used only when the issuer or its agent presents official documentation that states the security is worthless.
•
If the position is both worthless and nontransferable (i.e., there is no active transfer agent), XYZ will purchase the shares referenced in the authorization section for a total purchase price of one dollar ($1.00). By authorizing this transaction, the undersigned recognizes that the transfer books of the issuer of the security are currently closed. The undersigned further acknowledges that in selling the shares to XYZ, all right, title and interest will be transferred to XYZ and any ability to reclaim the shares will have been relinquished.
•
If an active transfer agent is located for a worthless position, there are two options available depending on whether the position is eligible for Direct Registration. As of 2009, the Depository Trust Company (DTC) adopted a procedure whereby it will no longer accept requests from brokerage firms, banks or trust companies for the issuance of physical stock certificates for U.S. issuers that participate in the Direct Registration System (DRS).
–
For securities that are not DRS eligible, the physical certificate will be registered and shipped for a fee of $500. This fee has been imposed by DTC for all U.S. issuers that have not elected to participate in the DRS, and will be debited from the account referenced in the authorization section of this form. In the event that there are insufficient funds, Merrill will not proceed with the removal of the shares referenced in the authorization section of this form. By authorizing this transaction, the undersigned acknowledges and agrees that the associated fees will be the sole responsibility of the account holder.
–
For securities that are DRS eligible, a statement of ownership will be provided as a cost of $25. After the statement is received, you can request a certificate directly from the transfer agent, if available.

 

[antelopedundee]

That makes no sense to me either, what’s the harm in just leaving it, are you trying to get beck 50 bucks?

I don't intend to pay to remove it. The account has a POD; Pay On Death designee. Rather than go through the hassle of submitting a death certificate and whatever else is needed to claim the funds, the POD designee could simply liquidate any positions and transfer the cash to a linked bank account which also has the same POD designee. Then just go to the bank and present the death certificate and claim the cash. Would really be no need to close the brokerage account so just let it stagnate. What kind of legal trouble could come from trading in someone's account after they're deceased? If death was imminent I could liquidate and transfer, but if I died in say a car crash then that action wouldn't be possible.

 

[SAJ-99]

I asked several years ago and was told it would be $500 to have it removed. So yesterday I looked into my old messages and found that there is a form one would need to fill out and submit to request removal.
From the form.

Worthless — This term is used only when the issuer or its agent presents official documentation that states the security is worthless.
•
If the position is both worthless and nontransferable (i.e., there is no active transfer agent), XYZ will purchase the shares referenced in the authorization section for a total purchase price of one dollar ($1.00). By authorizing this transaction, the undersigned recognizes that the transfer books of the issuer of the security are currently closed. The undersigned further acknowledges that in selling the shares to XYZ, all right, title and interest will be transferred to XYZ and any ability to reclaim the shares will have been relinquished.
•
If an active transfer agent is located for a worthless position, there are two options available depending on whether the position is eligible for Direct Registration. As of 2009, the Depository Trust Company (DTC) adopted a procedure whereby it will no longer accept requests from brokerage firms, banks or trust companies for the issuance of physical stock certificates for U.S. issuers that participate in the Direct Registration System (DRS).
–
For securities that are not DRS eligible, the physical certificate will be registered and shipped for a fee of $500. This fee has been imposed by DTC for all U.S. issuers that have not elected to participate in the DRS, and will be debited from the account referenced in the authorization section of this form. In the event that there are insufficient funds, Merrill will not proceed with the removal of the shares referenced in the authorization section of this form. By authorizing this transaction, the undersigned acknowledges and agrees that the associated fees will be the sole responsibility of the account holder.
–
For securities that are DRS eligible, a statement of ownership will be provided as a cost of $25. After the statement is received, you can request a certificate directly from the transfer agent, if available.

It is hard to have a worthless security that is still valid as a security. I would need to know what the exact security is. US Securities that aren’t DTC registered are pretty rare. If it is a stock and truly worthless, I presume the company is bankrupt? This would wipe out the equity. Seems you have created quite an interesting situation.

 

[antelopedundee]

The stock is Newcare Health Corp and shows up in my account as 651053100. IIRC it was a penny stock at the time. I don't remember the trading symbol. Clicking on it gives the message; "We're sorry. Security information is not currently available. Please try again later." It was purchased on 10/25/2004. They went bankrupt some time after that. A tax time after that in order to clam zero value I was told I would need a certificate of no value from the brokerage, but that was long ago.
Also several years ago I deleted the message from the brokerage explaining why I'd need to pay the $500, something about it still having an active number or something.

If I drained the funds could they try to claw them back or would they be left holding the bag as long as the account remains open?

 

[SAJ-99]

The stock is Newcare Health Corp and shows up in my account as 651053100. I don't remember the trading symbol. Clicking on it gives the message; "We're sorry. Security information is not currently available. Please try again later." It was purchased on 10/25/2004. They went bankrupt some time after that. A tax time after that in order to clam zero value I was told I would need a certificate of no value from the brokerage, but that was long ago.
Also several years ago I deleted the message from the brokerage explaining why I'd need to pay the $500, something about it still having an active number or something.

The number is the stock’s CUSIP. Ticker was NWCA. It filed for chapter 11 in 1999 and it tried to reorg but failed. Latest thing I can find is in 2004 its President was indicted for stealing employee 401k and health contributions, but even that was during the 1999 bankruptcy. My point is I’m not sure how you bought the stock in Oct 2004. Best I can tell, this company no longer exists (was already gone in 2004) and certainly should not show on your statement.

It appears the broker isn’t charging the $500, DTC is. DTC can’t transfer the shares electronically through DRS (because they don’t exist), so they charge $500 to create a physical stock certificate. Yes, a physical stock certificate for a company that no longer exists. That is why I think your broker records are messed up. Your broker should be able to tell you what you hold. It might be a legal claim from some residual lawsuit, but I can’t find it. Make them trace it all the way back to the stock when it was traded and why it’s is still in your account. The broker rep may have been in high school when the company went defunct. Make them do the work. It will be a great learning experience.

 

[antelopedundee]

They told me that they couldn't just remove it because it had a [possibly active] CUSIP number. I thought that the ticker symbol was NWCA, but Newcare didn't come up when I Googled NWCA. The $500 would still come from my account tho. It currently shows held since 10/05/2004. I don't know when I bought it. I believe at the time the brokerage was Quick and Reilly. Later Q & R became part of Fleet Boston Financial which was acquired by Bank of America and got incorporated into their investment division where it remains today.

Learning experience for them or for me or for both?

 

[SAJ-99]

Learning experience for them or for me or for both?

For them. I mean, for you too I guess. It’s been on your statement for over 20 years. The ticker and cusip arent valid because the company is defunct. I would think that even if you told them you would pay the $500, the back office would be laughed at by DTC.

Your broker history explains how it got so messed up. It should have been removed a long time ago. BOA can figure this out.

 

[antelopedundee]

I may just let a sleeping dog lie and as long as I do B of A will probably do the same even after I'm gone.