Case study: Verifying a mystery shareholding in the USA

Title Research were appointed by a gentleman to verify a shareholding in the USA. Our client had been approached by a New York-based company (with offices in the World Trade Centre) that wanted to acquire these shares for $137,500. The company appeared to have a copy of our client’s share certificate and asked him to sign a non-disclosure agreement.

Our client is a shareholder in other companies, but didn’t recognise this particular shareholding. This made him wary of moving forward without first verifying the shareholding. That’s where Title Research stepped in to identify whether the company’s attempt to acquire his shares was legitimate.

During our research, we found that whilst the transfer agent named on the share certificate did exist, they had never been the share registrar for this company. The company, in fact, had never existed, but had a generic enough name that you could assume it had merged with another company.

The company that had approached our client had a very realistic-looking website, but they did not have any company registration details. They were unable to provide information on registered Attorneys or Partners within the firm.

Our client had been advised that this company would not take any payment from him, but they would need him to surrender his original share certificate (which didn’t exist). They explained that this would be easy to do, which was another red flag, as reissuing a share certificate in the USA is a very complicated process. Undoubtedly, it would be at this point that our client would be asked to pay an indemnity fee to reissue the share certificate.

We concluded our verification by reporting back to the client that the shares did not exist, and neither did the company that had approached him to try to buy them.

This case highlights how important it is for shareholders to be cautious if they are approached to sell their shareholding. Verifying a shareholding with a specialist asset repatriation service can be a simple and easy way to ensure that any attempts to acquire shares are genuine.