Governments can take your stocks without your permission. It happens all the time

Here is some investment advice you probably haven’t heard before: If you own stock, occasionally log in and jiggle the handle. Otherwise, depending on where you live, a state may eventually decide that you have abandoned your investment.

Not because you died. Not because anyone proved you moved away. Not necessarily because your mail was returned. You may still be receiving statements. Your dividends may still be landing automatically in your bank account. You simply haven’t done anything lately.

That distinction sounds absurd. It is becoming increasingly important.

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Over the last few years, states have quietly been rewriting unclaimed-property laws in ways that make securities easier to declare abandoned. The clock has gotten shorter and the definition of "abandoned" has gotten broader.

Computershare, one of the country's largest stock transfer agents, says there was a time when most states waited seven years before treating stock as abandoned. Today, more than half use three years. Even more consequential, states have increasingly shifted from a "lost" standard, such as returned mail, to an "inactivity" standard. Computershare itself calls the trend "unfortunate."

Think about what changed.

Under the old logic, the government was essentially saying: We can't find you. Under the new logic, it can be: You haven't contacted us lately. That is a radically lower bar for taking custody of somebody's investment.

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And for the investor who follows the most basic rule of long-term investing — buy good companies and leave them alone — it creates a bizarre trap. Computershare warns investors that merely receiving statements or having dividends automatically deposited may not qualify as sufficient activity under some state laws.

In other words, the financial system may know exactly where your dividends go but still decide that you have disappeared. Then the machinery starts.

Your brokerage firm or transfer agent identifies the account as approaching dormancy. Notices go out. If the right kind of response doesn't arrive, the securities can be transferred to the state as unclaimed property.

And then something far more consequential can happen. The state can sell your stock.

Ask Jan Peters. Peters is a German citizen who worked for Amazon and owned 1,029 Amazon shares before the company's 20-for-1 stock split. California ended up with his shares even though Peters lived in Munich, Germany. His Supreme Court petition says his address had somehow become, "Munich, CA 00000."

California sold the Amazon stock for about $1.6 million. By June 2025, Peters calculated that those same shares would have been worth more than $4.2 million. He eventually received the sale proceeds. He did not receive the Amazon investment he had owned or its subsequent appreciation. His challenge ultimately reached the Supreme Court, which declined to hear it in October 2025.

From the state's perspective, Peters' abandoned property had been processed. From his perspective, roughly $2.6 million of investment appreciation was gone.

That raises an obvious question. Why are states making it easier for investments to enter this system? The official answer is consumer protection.

States argue, with some justification, that unclaimed-property programs act as a giant lost-and-found. Instead of leaving forgotten assets with banks and corporations indefinitely, the state takes custody and creates one central place where owners can search for them.

There is another side to the ledger, however. States get the money. Once unclaimed property reaches the government, states generally can use much of the cash while waiting for owners to appear. The liability to the owner remains, but the money itself can help finance government. And budget writers have occasionally been remarkably candid about what shorter dormancy periods mean.

In 2011, the Texas Legislative Budget Board recommended shortening several unclaimed-property dormancy periods. It projected that doing so would produce a one-time $72 million gain to the state's General Revenue Fund. The report also made the consumer argument that shorter periods could make owners easier to locate. Both things can be true.

New Jersey was even more dramatic. When it considered reducing various dormancy periods to three years, the state's Division of Taxation projected that revenue from existing unclaimed-property categories could jump from about $90 million to $309 million in one fiscal year. It separately projected another $72 million from newly covered or clarified categories, including securities.

This does not prove that every state legislator changing an unclaimed-property law is plotting a cash grab.

It proves something more important: The financial incentive is not imaginary. Governments calculate it. And everyone else in the system has incentives of their own.

Transfer agents and brokers must comply with dozens of different state laws. They need standardized procedures that can process millions of accounts cheaply and efficiently. Contractors get paid to administer unclaimed property. Brokers can get paid to take custody and sell securities. States get assets sooner when dormancy periods shrink.

The investor is the odd person out. The investor's interest may be exactly the opposite: Leave my stock alone.

And history shows that the machinery does not always get it right.

In 2006, the Securities and Exchange Commission (SEC) accused Bank of New York of failing to properly search for approximately 14,159 lost securityholders because of mailroom practices and computer coding errors. About $11.5 million of their assets ultimately went to states as unclaimed property.

The SEC's remedy was revealing. Bank of New York had to compensate affected investors based on the greater of the value when their assets were escheated or their later value, recognizing that an old cash value does not necessarily make an investor whole.

Then, in 2023, the SEC found problems in the lost-shareholder procedures at DST Asset Manager Solutions. Federal regulators concluded that the firm's internal screening rules prevented some potentially better addresses from being used to contact investors, putting their property at increased risk of being sent to states.

So, this isn't merely a hypothetical concern about what an automated system might do. Regulators have documented cases where the systems failed.

Meanwhile, the volume is enormous. Computershare reported 51,320 lost-securityholder accounts remitted to states in 2024 alone. That does not mean those 51,320 transfers were improper. It means this isn't some obscure process affecting a few forgotten stock certificates in somebody's attic.

It is an industrial-scale pipeline. And Washington is finally starting to ask questions.

In April, Massachusetts Democrat Sen. Elizabeth Warren asked the organization representing state unclaimed-property administrators to explain why states have been switching from returned-mail standards to inactivity standards and shortening dormancy periods.

Florida, meanwhile, has begun moving in the opposite direction. Its 2026 reforms restore returned mail or failed electronic communication as an important trigger for securities and extend an owner-inactivity period from three years to 10 years in specified circumstances.

That is closer to common sense. If I stop visiting my house for three years, I still own my house. If I leave a painting in a closet for 10 years, I still own the painting. And if I buy 500 shares of Apple and don't touch them for years, that is not evidence that I abandoned them. It may simply mean I am a patient investor.

Unclaimed-property law was created to protect owners whose property had genuinely become lost. Somewhere along the way, "lost" started becoming "inactive." And once government can treat doing nothing as evidence that you've abandoned something, the concept of ownership starts getting awfully thin.

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The rule should be simple: If you know who I am, you know where I am, and there is evidence that the account still belongs to me, my stock isn't abandoned.

It's mine. Leave it alone.