Notable Shareholder Service Developments in 2014…So Far

2014 has been an interesting year in a quiet but meaningful way.  Nothing as dramatic as a #1 service provider buying a #2, or an industry-rattling regulatory change.  But still, much has happened that corporate secretaries and investor relations practitioners need to know. 

Computershare acquired Registrar & Transfer Company

This gave the already #1 stock transfer agent over 900 more corporate clients and almost 700,000 additional shareholders to serve.  More importantly, it reduced Computershare’s number of major U.S. adversaries by 20% — from five to four.  Fortunately, however, there is plenty of competition left to keep Computershare from “driving” industry pricing and practices going forward.

Georgeson acquired Eagle Rock Proxy Advisors

This was a corollary transaction to Computershare/R&T, being the proxy solicitation subsidiaries of each.  And for similar reasons it was not a big deal for #1 solicitor Georgeson, growth-wise.  It did not change the U.S. proxy solicitation landscape very much either, because there was and is plenty of competition to keep Georgeson from dominating this arena.  Just the same, it was a transaction that definitely got noticed.

American Stock Transfer/Phoenix Advisors acquired D.F. King & Co.

Representing the other solicitor acquisition in 2014, this one actually was significant – for two reasons.  First, D.F. King has been a major player in the business for 72 years, so its disappearance will be “felt” by many clients and stakeholders.  And second, while Phoenix Advisors was a decent-sized start-up, staffed by many industry veterans, it needed more bulk and client reach – which it now has.

American Stock Transfer acquired the assets of Illinois Stock Transfer

Almost never does a stock transfer agent go out of business for committing a crime, but it happened this year with Illinois Stock Transfer Company, a small agent with 130 corporate clients.  The company’s CEO used customers’ money (for dividend funding, DRIP investments, etc.) to cover IST’s own business and payroll obligations.  The SEC discovered the fraud in a routine examination, and after an asset freeze wound up authorizing their acquisition by AST.  We congratulate both the SEC and AST for protecting IST clients in a timely manner from some serious potential problems.

Continental Stock Transfer acquired FRS Equity Strategies

This move bolstered what was already a special strength (stock option and restricted stock plan administration) for this fourth largest U.S. transfer agent.  Continental and FRS, out of Silicon Valley, had previously been working together, and this year Continental outright bought FRS and created a subsidiary called Continental/FRS Plan Administration.  By our reckoning this makes Continental the third largest transfer agent provider of equity plan administration in the country.

SunGard rolled out Stream

By introducing its Stream Transfer Agency solution this year to replace the CSSII platform, SunGard is allowing many companies that have historically performed stock transfer “in-house” to stay that way.  Stream provides issuers and shareholders with robust online connectivity; captures all “cost basis” data that modern systems are now required to; and makes more tasks automated, error-free and less costly to perform.  This was as notable an event in 2014 as any, we think, since it strengthened and thus further entrenched what, as a group, constitutes a top U.S. transfer agent:  those companies who want to be their own service provider.

TS Partners re-asserted its SunGard rivalry

We were reminded of the extent to which TS Partners, specifically its TranStar software, vies with SunGard for the attention of corporations and transfer agents requiring direct and back office stock transfer support.  TS Partners has a broad constituency of its own, and should be acknowledged right along with SunGard.

Increased corporate actions year-over-year

As of September, M&A activity in the U.S. was way up dollar-wise year-over-year – to more than $1 trillion versus less than $700 billion in 2013.  Today’s levels finally rival 2007, just before the Great Recession.  This means transfer agents are holding (and earning interest on) more funds pending surrender of exchangeable shares by stockholders – plus earning more fees on the more numerous deals themselves.  This is a little-known but key ingredient to a healthy stock transfer industry.

Shareholder Service Solutions created a U.S. Transfer Agents Synopsis

For $95 anyone can now have a concise yet thorough description of the major U.S. stock transfer agents.  See our Products tab.