States getting more unclaimed money

BATON ROUGE, La. — Passage of the Sarbanes-Oxley corporate reporting law and other changes in corporate governance have caused a large increase in the amount of “unclaimed property” money being collected by all 50 states, state treasurers said.

That means a growing number of Americans could collect large piles of money, if they only knew where to look. A Baton Rouge man recently learned that the state of Louisiana owes him about $750,000 in stocks and dividends from an investment account he had lost track of years ago.

“When somebody shows up, you give them their money,” said John Kennedy, Louisiana’s treasurer. “But most people don’t know it’s there.”

States collected $22.8 billion in 2003 in money belonging to people who didn’t come forward to claim it — a 44 percent increase over the $15.8 billion they collected in 2000, according to surveys by the Lexington, Ky.-based National Association of Unclaimed Property Administrators.

In the past, cash flowing into so-called “unclaimed property funds” came mainly from uncashed payroll checks, abandoned bank and brokerage accounts, and inheritances that the heirs were unaware existed.

Several factors have caused the recent spike, state treasurers said. Passage of Sarbanes-Oxley in 2002 forced companies to tighten their auditing processes, leading them to hand over more unclaimed money to governments, said Benny Spann, head of Louisiana’s unclaimed property division.

Banks, for example, must transfer to state governments the money in any account whose owner has fallen out of touch with the institution for anywhere between three to five years, depending on the state’s law.

Sarbanes-Oxley meant financial institutions became more attuned to those laws, Spann said.

“For many years, that was completely under the radar,” Spann said.

Jeb Spalding, Vermont’s treasurer, said another reason is a change in the insurance business. Many mutual insurance companies, owned by policyholders, have reorganized to become publicly traded companies. As a result, policyholders have received billions of dollars in stock and cash from insurers’ initial public offerings — though many don’t realize it.

Some state treasurers said other reasons could be the popularity of Internet stock accounts — which clients sometimes forget they opened — and the fact that Americans are now more likely to move from city to city, meaning they often open bank accounts, then forget them when they move.