AG Coakley Recovers Money for Massachusetts Investors From BNY Mellon Shareowner Services and UPRR, LLC
"In order to foster a fair marketplace, companies must be transparent," said Attorney General Martha Coakley. "In this case, the companies misled consumers because they failed to disclose their real options."
BNY Mellon Shareowner Services serves as "transfer agent" for energy giant Chevron Corporation. Transfer agents handle dividend distributions, transfers of stocks, and various other tasks for a corporation issuing common stock. One of the tasks of a transfer agent is to keep track of current addresses for shareholders. However, sometimes transfer agents lose track of shareholders when they move without leaving forwarding addresses, or when investors die and their shares then go into the custody of the investor-estate's trustee.
In this particular case, the BNY Mellon subsidiary hired an independent contractor, UPRR, to perform additional searches to track down missing shareholders. When UPRR located those shareholders in Massachusetts, UPRR sent a "letter of transmittal," whose text was agreed upon with BNY Mellon, to the Massachusetts consumers. This letter stated that consumers risked losing their misplaced Chevron shares and dividend checks to the State unless they acted to claim them. The letter indicated that UPRR would replace the checks and stock certificates, and sell certificates for the investors if they chose to cash them in, for either 10% or 20% of the value of the asset, depending on the requested services.
The letters did not note that when the state's Abandoned Property Division secures lost assets, the consumer may then simply put in a claim and get the money back from the state free of charge. In addition, the letter failed to note that the transfer agent would provide many of the services free of charge or for a low flat fee. The Attorney General alleged that the letter misled some consumers, causing them to pay more than they needed to for the services.
For example, one Massachusetts consumer sought to replace and sell shares inherited upon the death of his father. The fee UPRR charged for these services totaled $6,462.67, in addition to $323 for a surety bond premium. If the consumer had used the transfer agent and an independent broker the costs could have been as low as $600. Another shareholder paid $488 to UPRR to release her uncashed dividend checks, which were valued at $4,880. The transfer agent would not have charged the consumer a fee at all for the same transaction.
Approximately 60 Massachusetts consumers paid UPRR for services after receiving the "transmittal letters." Under the Assurance of Discontinuance filed in Suffolk Superior Court, BNY Mellon Shareowner Services and UPRR must proffer full refunds to these consumers. The respondents must also pay $30,000 to the Commonwealth, and provide affirmative disclosures in any future letters to shareholders in order to prevent this problem in the future.
This case is being handled by Glenn Kaplan, Chief of Attorney General Martha Coakley's Insurance and Financial Services Division. Consumers with questions about the case can contact AG Coakley's Financial Services Hotline at 888-830-6277.