The deceased-estate detective with a nose for lost shares
A background as a Lifeline phone counsellor can often come in handy when your day job is a stockbroker, but for Jon Moses, the former seemed to lead inexorably to a unique niche of the finance world.
Moses is a specialist hunter of lost shares and dividends belonging to deceased estates. As principal of Gold Coast-based stockbroking firm JM Investments, much of Moses’ work is on behalf of estate solicitors and executors, tracking down shareholdings that may have been lost or forgotten, for many reasons, ranging from poor record-keeping on the part of the shareholder, changes of address, family turmoil, change of company name or code, and delistings/relistings.
“In a previous stockbroking role, due to my Lifeline background, emotionally charged calls would get sent my way, which meant I was handling a lot of estates,” he tells The Inside Adviser. “The pain points are super-consistent: the mess and confusion it was causing for families and their lawyers.”
Through years of experience, Moses has a fine-tuned ability to track lost shares down. In March this year he was able to boost the value of a deceased estate by about $1 million, by finding a forgotten share portfolio.
“That was pretty amazing, because we had almost given up,” he says. “The nephew of the deceased person was adamant that the person had owned shares. I’m not sure the estate solicitors believed him, because we had tried the stockbrokers and the registries. But we tried one more time.”
The easiest searches, says Moses, are those that involve reference numbers in the CHESS (Clearing House Electronic Sub-register System) system that processes settlement on the Australian Stock Exchange (ASX). CHESS facilitates the exchange of legal ownership and money between market participants recording the transactions on a sub-register. CHESS shareholders are allocated a holder identification number (HIN), which uniquely identifies a person as the holder of shares on the CHESS sub-register, while for each Issuer-Sponsored holding, the investor is allocated a unique securityholder reference number (SRN) by the relevant issuer. Unlike a HIN, an SRN will not identify any holdings on the CHESS sub-register; also, unlike a HIN, an investor will have a different SRN for each holding.
“The reference numbers help, but usually it’s an extra lot of steps, because you need to find the HIN and find the broker,” Moses says. “And when you’re dealing with deceased estates, a lot of shareholdings pre-date the CHESS era.”
But even with reference numbers, “name and address are the two biggest identifying factors,” he says.
“The name and address will usually get us the basics of it. I normally work directly with the solicitors handling the estate – they will send me a letter of instruction with the client’s name, and all the addresses that they’ve got on file to which shares may have been registered.
“If the shareowner lived on the land, sometimes a big piece of the puzzle is making sure that the name of the property is correct. If the solicitors can find any information, like a contract note, a dividend notification, a share statement, any sort of documentation, that helps as well.”
The share registries are also a pivotal actor in the process – but surprisingly, for negative as well as good reasons.
Many just forget to notify the company’s registry of a change of address. The company may then be taken over, go into liquidation or simply change its name.
“Share registries are always the major roadblock/headache for estate shares – wrong forms, contradicting advice and endless delays. They’re one of the major reasons why estate shares often pile up in the too-hard basket,” Moses says.
Every listed company uses a registry, which handles the administration of its share register. There are five main registries in Australia: Computershare, Link Market Services, Advanced Share Registry, Boardroom and Automic Group.
“As a part of my process I ring every registry at least two times, but sometimes I’ll call them up to half a dozen to a dozen times, depending on the complexity of the case,” he says. “Sometimes I’ll give them the exact same information over and over again, and get nothing; and then on the fifth or sixth call, they’ll find it. Repetition is a big part of what I do.”
Corporate demergers can help. “If an estate comes across my desk, and it’s got a holding in BHP or Woolworths, for example, and there’s not a corresponding holding in South32 or Endeavour Group (which were spun-off from those respective companies), that’s an obvious red flag that a holding has gone astray. But it shows how easy it is for shares to go missing, because that happens quite a bit,” says Moses.
There are “many different ways” that shareholdings can fall through the cracks, he says. Companies can change name, they can change code, they can be taken over or merged, they can be compulsorily acquired, they can be delisted and then relisted. Dividends and capital returns, too, often go astray.
“The dividend might have been sent by a cheque in the mail for a couple of decades, and then when the registry switched to direct credit, it would have sent a notification asking the shareholder for their banking details – and for whatever reason, they didn’t ever get that note, so the dividends have been accumulating and eventually they get moved into the unclaimed money fund with the Australian Securities & Investments Commission (ASIC), which then goes into the Commonwealth of Australia Consolidated Revenue Fund,” Moses says. Depending on the company, unclaimed dividends or distributions can be held by the company for up to six years, before being remitted to ASIC.
Dividends are a “pretty consistent kind of find,” he adds: it is not uncommon for JMI to find $15,000 to $20,000 worth of unpaid dividends of which the estate was unaware.
Lost shareholdings and dividend piles happen so often, he says, that estate lawyers are starting to see it as the rule, rather than the exception.