#United States #Washington #Investment Company Institute #SAFER Act #long-term investors

ICI Advocates for Long-Term Investors with the SAFER Act

The Investment Company Institute (ICI) has taken a stand for millions of American investors by advocating for the SAFER Act. This bipartisan piece of legislation aims to address the alarming trend of states seizing accounts belonging to long-term investors under the pretext that inactivity constitutes abandonment.

At a recent event focused on this critical issue, Representatives Sam Liccardo (D-CA) and Mike Lawler (R-NY) discussed the urgent need for a federal solution that aligns with the interests of investors. Many Americans have followed the guidance of financial experts to invest for the long haul, placing their trust in the notion that their savings will be secured for future needs. However, the reality in certain states is disheartening: accounts that remain inactive for a designated period can be declared abandoned, leading to their liquidation.

Understanding the Risks

ICI President and CEO Eric Pan began the event by highlighting the threat posed by state unclaimed property laws, which have increasingly targeted passive investors. He shared the unsettling reality that over 128 million Americans invest in regulated funds, many of whom intend to leave their accounts untouched. The practice of escheatment—where a state claims an inactive account—can severely impact these investors. When an account is escheated, the state often liquidates the assets, meaning that even if the investor manages to reclaim their funds later, they only receive the account's value at the time of seizure, disregarding potential market gains.

This issue is particularly poignant for retirement accounts, where forced liquidation could also result in undesirable tax implications. Pan stressed that the current climate, with states relaxing their escheatment rules, only exacerbates the problem.

Bipartisan Support

The lawmakers sponsoring the SAFER Act emphasized that this is a matter that transcends party lines—an issue that impacts American investors regardless of political affiliation. Liccardo articulated that Americans generally adopt a strategy of buying and holding investments, a method that the escheatment practices jeopardize. He cited the well-documented case of Walter Schramm, whose Amazon shares were liquidated by Delaware after being deemed abandoned. An investment that could have appreciated to nearly $100,000 was lost due to state action.

Lawler contrasted legitimate practices concerning unclaimed properties to the predatory measures taken by certain states. He stated, “It’s one thing to genuinely claim an asset that is abandoned, but it’s another matter entirely when states target long-term investors who simply choose not to touch their assets.”

Proposed Solutions

The SAFER Act proposes significant safeguards for investors. It would ensure that inactivity can no longer be used solely as a basis for escheatment and requires that states verify the death of the account owner before proceeding to claim assets. Additionally, it would prevent states from liquidating investments without first confirming abandonment, protecting the rights of investors.

Liccardo expressed hope that increased public awareness surrounding these laws would galvanize Americans into action, ultimately pressing Congress to adopt the SAFER Act. He noted, “Once the public understands the threat, they will advocate for their financial rights.”

As the conversation continues, it is clear that the SAFER Act represents a critical step towards ensuring the financial security of American investors against encroaching state laws. By rallying bipartisan support, the ICI seeks not just to safeguard investments but to create a unified front in protecting long-term financial strategies against potential threats.

In summary, the push for the SAFER Act is not merely about preserving wealth; it’s about ensuring fairness and protecting the rights of all American investors in a system that should prioritize their economic security above all else.