SEC Rule 17f-1 — Requirements for Reporting and Inquiry with Respect to Missing, Lost, Counterfeit or Stolen Securities

Posted on December 25, 2008 by Neil Garfield

General Rules and Regulations promulgated under the Securities Exchange Act of 1934

Another Item for Discovery

If they didn’t report it, then it isn’t missing.

Rule 17f-1 — Requirements for Reporting and Inquiry with Respect to Missing, Lost, Counterfeit or Stolen Securities

Definitions. For purposes of this section:

    1. The term reporting institution shall include every national securities exchange, member thereof, registered securities association, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, registered transfer agent, registered clearing agency, participant therein, member of the Federal Reserve System and bank whose deposits are insured by the Federal Deposit Insurance Corporation;
    2. The term uncertificated security shall mean a security not represented by an instrument and the transfer of which is registered upon books maintained for that purpose by or on behalf of the issuer;
    3. The term global certificate securities issue shall mean a securities issue for which a single master certificate representing the entire issue is registered in the nominee name of a registered clearing agency and for which beneficial owners cannot receive negotiable securities certificates;
    4. The term customer shall mean any person with whom the reporting institution has entered into at least one prior securities-related transaction; and
    5. The term Securities-related transaction shall mean a purpose, sale or pledge of investment securities, or a custodial arrangement for investment securities.
    6. The term securities certificate means any physical instrument that represents or purports to represent ownership in a security that was printed by or on behalf of the issuer thereof and shall include any such instrument that is or was:
      1. Printed but not issued;
      2. Issued and outstanding, including treasury securities;
      3. Canceled, which for this purpose means either or both of the procedures set forth in Rule 17Ad-19(a)(1); or
      4. Counterfeit or reasonably believed to be counterfeit.
    7. The term issuer shall include an issuer’s:
      1. Transfer agent(s), paying agent(s), tender agent(s), and person(s) providing similar services; and
      2. Corporate predecessor(s) and successor(s).
    8. The term missing shall include any securities certificate that:
      1. Cannot be located or accounted for, but is not believed to be lost or stolen; or
      2. A transfer agent claims or believes was destroyed in any manner other than by the transfer agent’s own certificate destruction procedures as provided in Rule 17Ad-19.
  2. Every reporting institution shall register with the Commission or its designee in accordance with instructions issued by the Commission except:
    1. A member of a national securities exchange who effects securities transactions through the trading facilities of the exchange and has not received or held customer securities within the last six months;
    2. A reporting institution that, within the last six months, limited its securities activities exclusively to uncertificated securities, global securities issues or any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificate; or
    3. A reporting institution whose business activities, within the last six months, did not involve the handling of securities certificates.
  3. Reporting Requirements—
    1. Stolen Securities.
      1. Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the theft or loss of any securities certificates where there is substantial basis for believing that criminal activity was involved. Such report shall be made within one business day of the discovery and, if the certificate numbers of the securities cannot be ascertained at that time, they shall be reported as soon thereafter as possible.
      2. Every reporting institution shall promptly report to the Federal Bureau of Investigation upon the discovery of the theft or loss of any securities certificate where there is substantial basis for believing that criminal activity was involved.
    2. Missing or Lost Securities. Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the loss of any securities certificate where criminal actions are not suspected when the securities certificate has been missing or lost for a period of two business days. Such report shall be made within one business day of the end of such period except that:
      1. Securities certificates lost, missing or stolen while in transit to customers, transfer agents, banks, brokers or dealers shall be reported by the delivering institution by the later of two business days after notice of non-receipt or as soon after such notice as the certificate numbers of the securities can be ascertained.
      2. Where a shipment of retired securities certificates is in transit between any transfer agents, banks, brokers, dealers, or other reporting institutions, with no affiliation existing between such entities, and the delivering institution fails to receive notice of receipt or non-receipt of the certificates, the delivering institution shall act to determine the facts. In the event of non-delivery where the certificates are not recovered by the delivering institution, the delivering institution shall report the certificates as lost, stolen, or missing to the Commission or its designee within a reasonable time under the circumstances but in any event within twenty business days from the date of shipment.
      3. Securities certificates considered lost or missing as a result of securities counts or verifications required by rule, regulation or otherwise (e.g., dividend record date verification made as a result of firm policy or internal audit function report) shall be reported by the later of ten business days after completion of such securities count or verification or as soon after such count or verification as the certificate numbers of the securities can be ascertained.
      4. Securities certificates not received during the completion of delivery, deposit or withdrawal shall be reported in the following manner:
        1. Where delivery of the securities certificates is through a clearing agency, the delivering institution shall supply to the receiving institution the certificate number of the security within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;
        2. Where the delivery of securities certificates is in person and where the delivering institution has a receipt, the delivering institution shall supply the receiving institution the certificate numbers of the securities within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;
        3. Where the delivery of securities certificates is in person and where the delivering institution has no receipt, the delivering institution shall report within two business days of notification of non-receipt by the receiving institution; or
        4. Where delivery of securities certificates is made by mail or via draft, if payment is not received within ten business days, the delivering institution shall confirm with the receiving institution the failure to receive such delivery; if confirmation shows non-receipt, the delivering institution shall report within two business days of such confirmation.
    3. Counterfeit Securities. Every reporting institution shall report the discovery of any counterfeit securities certificate to the Commission or its designee, to a registered transfer agent for the issue, and to the Federal Bureau of Investigation within one business day of such discovery.
    4. Transfer Agent Reporting Obligations. Every transfer agent shall make the reports required above only if it receives notification of the loss, theft or counterfeiting from a non-reporting institution or if it receives notification other than on a Form X-17F-1A or if the certificate was in its possession at the time of the loss.
    5. Recovery. Every reporting institution that originally reported a lost, missing or stolen securities certificate pursuant to this Section shall report recovery of that securities certificate to the Commission or its designee and to a registered transfer agent for the issue within one business day of such recovery or finding. Every reporting institution that originally made a report in which criminality was indicated also shall notify the Federal Bureau of Investigation that the securities certificate has been recovered.
    6. Information to be Reported. All reports made pursuant to this Section shall include, if applicable or available, the following information with respect to each securities certificate:
      1. Issuer;
      2. Type of security and series;
      3. Date of issue;
      4. Maturity date;
      5. Denomination;
      6. Interest rate;
      7. Certificate number, including alphabetical prefix or suffix;
      8. Name in which registered;
      9. Distinguishing characteristics, if counterfeit;
      10. Date of discovery of loss or recovery;
      11. CUSIP number;
      12. Financial Industry Numbering System (“FINS”) Number; and
      13. Type of loss.
    7. Forms. Reporting institutions shall make all reports to the Commission or its designee and to a registered transfer agent for the issue pursuant to this section on Form X-17F-1A. Reporting institutions shall make reports to the Federal Bureau of Investigation pursuant to this Section on Form X-17F-1A, unless the reporting institution is a member of the Federal Reserve System or a bank whose deposits are insured by the Federal Deposit Insurance Corporation, in which case reports may be made on the form required by the institution’s appropriate regulatory agency for reports to the Federal Bureau of Investigation.
  4. Required inquiries.
    1. Every reporting institution (except a reporting institution that, acting in its capacity as transfer agent, paying agent, exchange agent or tender agent for an equity issue, or registrar for a bond or other debt issue, compares all transactions against a shareholder or bondholder list and a current list of stop transfers) shall inquire of the Commission or its designee with respect to every securities certificate which comes into its possession or keeping, whether by pledge, transfer or otherwise, to ascertain whether such securities certificate has been reported as missing, lost, counterfeit or stolen, unless:
      1. The securities certificate is received directly from the issuer or issuing agent at issuance;
      2. The securities certificate is received from another reporting institution or from a Federal Reserve Bank or Branch;
      3. The securities certificate is received from a customer of the reporting institution; and
        1. Is registered in the name of such customer or its nominee; or
        2. Was previously sold to such customer, as verified by the internal records of the reporting institution;
      4. The securities certificate is received as part of a transaction which has an aggregate face value of $10,000 or less in the case of bonds, or market value of $10,000 or less in the case of stocks; or
      5. The securities certificate is received directly from a drop which is affiliated with a reporting institution for the purposes of receiving or delivering certificates on behalf of the reporting institution.
    2. Form of Inquiry. Inquiries shall be made in such manner as prescribed by the Commission or its designee.
    3. A reporting institution shall make required inquiries by the end of the fifth business day after a securities certificate comes into its possession or keeping, provided that such inquiries shall be made before the certificate is sold, used as collateral, or sent to another reporting institution.
  5. Permissive Reports and Inquiries. Every reporting institution may report to or inquire of the Commission or its designee with respect to any securities certificate not otherwise required by this section to be the subject of a report or inquiry. The Commission on written request or upon its own motion may permit reports to and inquiries of the system by any other person or entity upon such terms and conditions as it deems appropriate and necessary in the public interest and for the protection of investors.
  6. Exemptions. The following types of securities are not subject to paragraphs (c) and (d) of this section:
    1. Security issues not assigned CUSIP numbers;
    2. Bond coupons;
    3. Uncertificated securities;
    4. Global securities issues; and
    5. Any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificates.
  7. Recordkeeping. Every reporting institution shall maintain and preserve in an easily accessible place for three years copies of all Forms X-17F-1A filed pursuant to this section, all agreements between reporting institutions regarding registration or other aspects of this section, and all confirmations or other information received from the Commission or its designee as a result of inquiry.

44 FR 31503, May 31, 1979; 45 FR 14022, Mar. 3, 1980, as amended at 53 FR 37289, Sept. 26, 1988; 53 FR 40721, Oct. 18, 1988, 68 FR 74390, Dec. 23, 3003.

Filed under: foreclosure |

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5 Responses

  1. G.-Sylvester, on October 31, 2009 at 6:12 pm said:

    Dear Lane,

    If the note has been sold and pooled as a MBS(Mortgage Backed Security) then the bank would no longer be in posession of that instrument(Note) as it would have been submitted to evidence its existence, and to establish and validate its respective value within that pool (ie. pools of A, B, C, or high risk etc. loan borrowers: pooled together to assist a securities purchaser in calculating the risk of default associated in that transaction).

    If the bank no longer posesses the note, but has bundled it (with other similar risk notes), Securitized it within that pool to create a transferable, tradeable, sellable secured product (backed by each individual mortgage and note committment), then transfered or sold the servicing of those agreements to a servicing company, then the note has been refered to as a security (with respec to traded securities) “if” it has been securitized by the bank as outlined above (but on another level, are not the mortgage and note secured by the committment/agreement of the signor to honor those instruments)???

    The difference being is the bank/servicer the holder/owner of the note, or has it been securitized and sold to alternate owners who “themselves” have a right to make a claim for foreclosure if there is non performance. If, the bank is not the holder, nor in posession of the note then the bank is not the “Real Party at Interest” and has NO STANDING to ENFORCE A CLAIM of foerclosure without proving that they are, or that they have authority granted from the TRUE Real Party at Interest (the holder of that wet ink signature instrument)… NO NOTE – NO PROOF THAT ANOTHER WILL NOT COME WITH A CLAIM FOR PERFORMANCE AT A LATER TIME…

    Another consideration…

    Was not your note “the asset” that the bank sold/securitized to fund the purchase?

    Were you given a receipt for that asset???

    Did not the bank take your asset (Note) and trade it with an investor for federal reserve notes (debt instruments ) applied to a DDA(demand deposit account) from which a cashiers cheque was drawn?

    Did the Bank LOAN you anything??? or did your Asset get exchanged to fund the alleged loan by the bank???

    Does the United States Code even allow the bank to “Loan” its assets or those of its depositors???

    TITLE 12 > CHAPTER 2 > SUBCHAPTER IV > § 83
    Prev | Next
    § 83. Loans by bank on its own stock.

    (a) General prohibition
    No national bank shall make any loan or discount on the security of the shares of its own capital stock.
    (b) Exclusion
    For purposes of this section, a national bank shall not be deemed to be making a loan or discount on the security of the shares of its own capital stock if it acquires the stock to prevent loss upon a debt previously contracted for in good faith.

    could “contracted in good faith” mean your mortgage and note executed and delivered to the bank???

    If so, did they loan you anything, or as the money changers of old, did they take “your”asset MN(mortgage note) securitize and sell it to an investor to fund your loan???

    This is a private communication for “entertainment purposes” and not to be construed as legal advice..

  2. Juli, on August 18, 2009 at 6:10 pm said:

    I am not an attorney nor a securities expert, by any stretch, but as I understand it, and perhaps I am completely wrong, but if

    you do not have a security instrument that is first of all, original, signed in ink, clean, free of question, or clouid, and signed by he,

    or she whose name is borne on the document, how can you claim it is not fraudulent.. Not a copy, held in some vault, but the

    original. In a scenario where a copy of a document, in my case a forged document is held, no matter how secure it may be there,

    it is still of no value. If the Original is NOT maintained how can you ever count on it being worthy? Even if there has been no

    question of integrety? Because the Original is not there, it can be elsewhere, which could mean there is another “holder”, and in

    cases where these loans have been sold in and out of pools, there could potentially be countless others claiming a piece of your pie.

    As we have seen in our own lives and those of your (for the Attorneys on the site) clients, we can not count on anything. I am

    regularly amazed by something new each time I work on my case. Just this week, I have uncovered 2 new Insurers, 2 unknown

    individuals or entities, at the very least making a claim they hold Fire and Flood Insurance on my home, and that they have claim

    to my home. I already have Insurance on my home. The thought of someone I don’t know claiming to own Fire Ins Policy

    concerns me. I even contacted the Insuracne Company, and after much research I found the company with in a conpany who was

    e supposed Insurance Co. This one at least, turns out to be not valid, this came through the Company who beleives they are

    “Servicing “a mortgage on me, a mortgage by the way that was rescinded over two years ago, and many companys ago, all briefly

    claiming some hold, usua\y ownership of my property I told all this to the new prty who was involved in Seals,

    If this basic prerequeisite is not factual, then yes, it has very much to do with the Certifcate. Or so I would think. The Certificate

    would be fraudulaent also whould it not? If not fraudulent initially, wortuless as a result. AND, after all this group of people have

    done, there is a cloud on the Deed. The damage has been done.
    This happens to be one of my very issues, the Original Mortgage company after more than two years, has not come up with it. Of

    course my previous attorney insisted there was no reason to ask and they also beleived, the Lawyers that is, that it was 99.9

    percent likely they would have it. But certainly they don’t. They would have stopped me dead in my tracks. In the last mention of

    this, back in February, they said they still had not found it, but were still looking. (After more than two years)

    What I feel like the above post is saying is that there should have been a report by now. They can say anything they want Now I

    don’t know who forged Documents, as I have made allegarions concerning forged documnets. including approximate 5 to 7 sets

    of HUD 1 Settlement Sheets. Sets I did not see until many monehs later. But someone did forge them. Who is to say what

    someone willing to forge documents, will do next. Infact, it is my beleif the se peorpe can s

    I will request the original now, agian, since they are not suppose to leave it lost so long with out reporting. I assume because he

    certificates could be fraudulent (for lack of a better term.) if this is the case with the Security Instrument. Which I feel certain they do not have, for if they did, they would not show it, there is a forged name on the documents. They added my husbands name. There has to e an end to this eventually. Now, my next question is, how do you get information on Certificates? Doesn’t sound easy.

  3. Juli, on August 16, 2009 at 2:03 pm said:

    I am, trying, to put together subpoena for docs to the various entries, and individuals involved, per the Judge in Foreclosure proceeding.

    Would it be prudent to include a request for the answers and evidence of this SEC requirements in a subpoena for docs, during foreclosure proceeding, suspecting the Mortgage co will file a lost not affidavit? Though they have not done so yet, I have been trying to get the Original Docs, which I am 99.9 percent sure they do not have.

    The last reason was, we still have not found it, but are still looking. That was 5 months ago, and at least 3 transfers ago.

  4. Lane Houk, on January 4, 2009 at 2:26 am said:

    This rule specifically references “securities certificates” not notes. How do you interpret this? In foreclosure cases, the plaintiffs are seeking to re-establish the notes, not the security certificates. I see a big difference between the certificates and the notes. What say you?

  5. harold, on December 26, 2008 at 5:06 pm said:

    this appears to be a powerful defense against a plaintiff filing for lost note.

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