What Have Stock Transfer Agents Been Up To in 2011?

Quite a bit, although  mostly behind the scenes.   The group of 7  – 10 major commercial agents have been polishing their “cost basis”  functionality, newly required by the IRS at the beginning of this year for  straight-forward stock transfers.    Starting on January 1, 2012 dividend reinvestment and direct stock  purchase plan transactions, and resulting records, will also have to contain  new cost basis information, followed on January 1, 2013 by options and debt  security issues.  Some transfer agents “assessed” their clients  a special fee at the beginning of 2011 to cover the expense of cost basis  re-tooling, and some did not.   One or two  of those assessing a fee charged a lot of  money, and their inability to specifically account for the cost angered many  client companies.

The  whole industry reacted to the announcement Computershare will buy BNY Mellon’s  stock transfer business.   (See our  related articles on this website.)   Computershare and BNY Mellon were, of course, obliged to react the least, while the Department of Justice (DOJ)  evaluates whether the deal can happen in the face of such a large potential  market share aggregation.   We heard the  delay in making a decision might be due to the departure of the lead DOJ  official evaluating the transaction, who took a better job in the private  sector.   So, Computershare and BNY Mellon  continue to sit tight, while reassuring clients they will be a better as well  as bigger agent when the merger dust finally settles.   (We and most others still believe the deal  will go through…before year-end.)

For  Wells Fargo, good things continue to happen on the sales front, they having  attracted as new clients in recent months such household names as CBS  Corporation, Hewlett-Packard, Marsh & McLennan and McKesson Corporation.   Wells has also wisely beefed up its on-line  service tools this year, we gather.

At  American Stock Transfer, 2011 has seemed to be a year of healthy planning and  focus on its future efforts.   We say that  because we know there were many “new hires” in 2010 and 2011 that were  followed, somewhat surprisingly, by numerous lay-offs.   Like a major league sports team, AST looks  like it is fine-tuning its starting line-up to compete most effectively in the  post-Computershare + BNY Mellon world.   AST  is also taking appropriate steps to make its new Phoenix Advisory Partners  proxy solicitation firm an integral part of its service offerings, as well as  combine North American forces with its sister company Canadian Stock  Transfer.

Continental  Stock Transfer is not only talking like a bigger player than it has  historically been, in light of fewer competitors in the stock transfer space, but  it is also acting like one given its  recent win of a major stock transfer account in the Mid-Atlantic region.   We know about it because the company in  question is also a client of ours, but records conversion has not yet happened  so we must withhold the company’s name for the time being.   Continental has all the tools to handle an  account of almost any size, coupled with an attractive, smaller agent “feel” –  so, keep an eye on them.

And, do the same with Registrar and Transfer Company.   R&T is stock transfer agent for the most  financial institution clients in the U.S; and, while many of these are regional  banks in the smaller client category, as a class these companies tend to be more  demanding, and complicated.   We also know  first-hand that R&T has been bidding on larger and larger accounts of every  type in 2011, and we have no doubt it will win its share of these clients in  the future that are looking to be bigger fish in a smaller pond – a pond that seems  to have all the amenities a company would need.    This includes proxy solicitation, through R&T’s new Eagle Rock  subsidiary.

Broadridge  Corporate Issuer Solutions, the newest major U.S. stock transfer agent (via  acquisition of a northeast regional player in March 2010), has already scored a  major account win in 2011:  Spectra  Energy Corp.   Based in Houston, Spectra has  no less than 140,000 registered shareholders, pays a dividend and has a  dividend reinvestment plan.   Such  accounts are in the top 1% of all transfer agent client portfolios, and  Broadridge pulling off this win must have stunned the other agents –  notwithstanding everyone’s awareness of Broadridge’s well-entrenched infrastructure  handling most proxy and broker-related back office work in the United  States.   Broadridge will be one of the  more interesting players to watch in the competition for “non-Computershare/BNY  Mellon market share” going forward, since it has the farthest way to go (in  spite of Spectra Energy) but also one of the faster cars in the race.

We  encourage readers to keep tabs on the stock transfer industry by viewing this  website from time to time.   We will do  our best to cite all major developments in a timely manner.