Michael Houghton Quoted in Corporate Counsel Weekly on Delaware Supreme Court Ruling: Corporate Liability for Escheated Securities
September 2009
Wilmington, DE – September 23, 2009 – Morris Nichols regulatory and commercial law counseling partner and Best Lawyers Delaware Banking Lawyer of the Year Michael Houghton was featured in the article, “Delaware Supreme Court Rules Corporations May Be Liable When They Escheat Securities” in the September 23, 2009 edition of Corporate Counsel Weekly.
The article discusses the holding in A.W. Financial Services S.A. v. Empire Resources Inc., Del., No. 55, 2009, 9/15/09) where the Court concluded that the state’s escheat statute does not preclude common law causes of action, such as negligence and conversion, against corporations and transfer agents for wrongful escheat.
Michael, co-author of Unclaimed Property, a comprehensive analysis of the law of unclaimed property published in BNA’s Corporate Practice Series Portfolio, offered insight into the Court’s decision, stating, “as a practical matter, this means that simply remitting securities to the State does not absolve a holder from claims by a party for, for example, common law claims such as negligence or conversion in wrongfully delivering property to the State. Holders, and any transfer agent or registrar acting for or on behalf of the holder, may be held liable if they do not escheat unclaimed securities in ‘good faith’ as defined by 12 Del. C. § 1203(d).’’ As a consequence, ‘‘holders must be even more diligent in knowing and dealing with the owners of securities and complying with Delaware law when escheating unclaimed securities.’’