Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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If no criminal action is suspected regarding a lost security, when must it be reported if it is not found on the third day?

Immediate report to police
Report to SIC and Transfer Agent
No reporting necessary
Notify the compliance officer

The correct answer is: Report to SIC and Transfer Agent

When a lost security is not found by the third day, it is crucial to report it to the Securities Information Center (SIC) and the Transfer Agent. This is because the SIC is responsible for maintaining a database of reported lost or stolen securities, and involving the Transfer Agent is necessary to take appropriate action to reissue the security if it is confirmed as lost. Reporting in this timeframe is essential to protect the interests of the security holder and ensure that necessary steps are taken to prevent unauthorized transactions or potential fraud related to the lost security. The urgency of this reporting is due to regulatory frameworks that require prompt action to secure investor assets. The Transfer Agent plays a critical role in managing the records of the securities and can assist in the verification process or in issuing a replacement.