States tighten dormancy rules, allowing them to seize and sell idle stock holdings

U.S. states are shortening the period before securities are deemed abandoned and can be transferred to government custody, as shown by a German investor losing billions in Amazon stock appreciation after California seized his shares.

Over the last several years, many U.S. states have rewritten unclaimed-property statutes to make it easier to label securities as abandoned, cutting the waiting period from seven years to three and replacing a "lost" definition with an "inactivity" one. Transfer agents such as Computershare now monitor accounts, send warnings, and, without a satisfactory response, hand the holdings to the state, which can liquidate them; California's appropriation and sale of Jan Peters's 1,029 Amazon shares—sold for about $1.6 million but later valued at over $4.2 million—demonstrates the personal cost.

States argue the program acts as a public lost-and-found, yet budget analyses reveal sizable fiscal incentives, with Texas estimating a one-time $72 million boost and New Jersey projecting revenue jumps to $309 million in a single fiscal year. Federal regulators have cited mishandlings by firms like Bank of New York and DST Asset Manager Solutions, highlighting systemic flaws. While most jurisdictions continue to shorten dormancy periods, Florida's 2026 reforms extend the inactivity window to ten years in certain cases, suggesting a possible policy shift. Investors are advised to regularly check and act on dormant holdings to avoid unintended forfeiture.