The importance of updating files
The SEC, along with those banking agencies who share responsibility for regulating transfer agents, need to revisit the transfer agent registration requirements to assess whether these requirements are rigorous enough to properly identify and weed out those persons who may not be fit to serve as transfer agents in our capital markets.
10) I have found countless examples of problems with the Forms TA-1 filed by transfer agents.
Concept releases may be appropriate in situations where the Commission has a lack of information and is unsure how best to proceed, or whether to proceed at all. Transfer agents play an important role in our capital markets.They act as registrars and keep track of changes in the record ownership of a company’s securities. They ensure that companies’ interest, dividends, and other distributions get paid to the right holders of stocks and bonds. Transfer agents also monitor the restrictive legends and “stop transfer” orders that distinguish restricted securities from freely-tradable securities. This responsibility puts transfer agents in a unique position to identify and potentially prevent unregistered securities from being unlawfully distributed.For example, the 2011 Roundtable and the SEC’s examination and enforcement activities provide significant information to allow the Commission to begin to act. As one example of action that should be taken, the Commission should adopt rules providing additional safeguards to protect against the unlawful distribution of unregistered securities.These safeguards could include transfer agent due diligence obligations prior to the removal of restrictions (or legends) on stock certificates that otherwise would restrict their transfer. As noted, transfer agents function as gatekeepers, and persuading them to remove the restrictions on unregistered stock certificates is an essential step in perpetrating a fraudulent offering of unregistered securities.