California bill seeks new rules for seizing abandoned stocks, sparking industry pushback

State Controller Malia Cohen introduced Assembly Bill 1447 to clarify the process for California to assume custody of abandoned securities after owners do not answer a notice from the holder. The legislation, written by Assemblymember Mike Gipson, would add a requirement that owners must not respond to either mailed or electronic alerts before assets can be escheated. Investment industry groups, including the Investment Company Institute and the California Chamber of Commerce, contend the bill would make the state overly aggressive, pointing to Florida’s experience with over $1 billion of seized securities.

A competing proposal that would mandate proof of returned mail was previously rejected in the Senate Appropriations Committee, and its author, Assemblymember Cottie Petrie-Norris, argued that such a standard best protects Californians. Critics, including Controller challenger Herb Morgan, say the measure could hinder the return of forgotten assets while boosting state revenue. The bill is expected to be considered by the Senate Judiciary Committee soon.