
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, July 25, 1994                   TAG: 9407250013
SECTION: MONEY                    PAGE: 6   EDITION: METRO 
SOURCE: Mag Poff
DATELINE:                                 LENGTH: Long

DON'T LET CHECKS BECOME STALE

Q: When I retired from Norfolk Southern Corp. in 1987, I received six shares of stock outside my retirement plan. Dividends on my shares in the plan are reinvested, but I received small checks of less than $2 each quarter on the six shares. Since 1987, I just threw these checks in a drawer thinking I would give the money to my grandchildren.

Recently I took all of these checks and tried to cash them. The checks came back, and NS finally issued a new check covering the full amount. The new check said it had to be cashed by a certain date, but the old ones didn't have a date. Why weren't they good?

A: Any check is considered stale after six months, and the payer may not honor it. Section 8.4-404 of the Virginia Code says that a bank is under no obligation to pay a check after six months (except for a certified check), because it is stale.

You did not mention the bank involved, but Gail Hoffman, vice president of customer service in Roanoke for First Union National Bank of Virginia, said the bank usually confirms with the payer before cashing a stale check. Some check issuers refuse to pay them, Hoffman said. She said there used to be a law requiring banks to reject such checks, but the law was repealed about two years ago.

Bob Auman, spokesman for NS, said the company has to issue a new check or recertify the old one after six months have elapsed. He said the process is expensive for the company because it happens about 10 times a day.

You should deposit or cash checks as soon as practical after receiving them. This is a business transaction, and financial matters should be handled promptly instead of possibly leaving your heirs to contend with the problem.

Requirements for security representatives

Q: I have a comment on bank securities representatives. Recently I read in a magazine that securities representatives can become registered representatives by passing a test that is not as hard to pass as getting a driver's license. Also, not even a high school education is required. Anyone could qualify as a securities agent or representative. I recently had a bad experience with a bank securities representative, and I will use a broker in the future.

A: It is true that Virginia law is silent on the subject of educational requirements for a securities representative, whether he or she works for a bank or a brokerage house. A high school diploma, therefore, is not a prerequisite for a license.

But Lisa O'Shea, spokeswoman for the Virginia Corporation Commission, said all applicants for registration must pass the national examination prepared by the North American Securities Administrators Association. This test is given nationwide, and it covers securities law. She said the examination is ``not considered a piece of cake,'' and applicants generally must study the laws and regulations in order to pass it. The passing rate is 80 percent. The requirements are the same for those who sell securities, whether they work for a bank or a stockbroker.

Stock hard to get a read on

Q: We have stock in Lifetime Hoan Corp. of Brooklyn, N.Y. The board of directors approved an increase in the number of shares from 10 million to 25 million, which will dilute our current holdings tremendously. They want to give stock to an employee stock option plan and are going to use the rest to raise capital. We voted against this, because we didn't want our stock diluted, but the proposal passed. Why would the directors, who own more than 40 percent of this stock, vote to dilute our stock so terribly?

A: Lifetime Hoan, a manufacturer of cutlery and kitchen tools, is traded very thinly over the counter through the so-called ``pink slips'' that are distributed to brokers weekly. A few brokers make a market in the stock, so there are no daily quotes or news of the company over the computer and wires. It is difficult to determine what is going on with this stock.

Richard Wertz, assistant manager of the Roanoke office of A.G. Edwards and Sons, could not comment on the stock. But he said an issue of more stock is not dilutive in all cases. It is not diluting, for instance, if the stock is selling above book value.

In addition, the directors may have had a good reason to issue new stock for the good of the company. The most obvious possibility is that the company was in dire need of new capital to either save the enterprise or expand.

You should either refer to the literature from the company or write a letter of inquiry directly to the company.