My Transfer Agent

Transfer Agent Industry History

In the late 1800's, publicly held corporations performed the majority of transfer agent functions in-house. This trend continued until the 1930's when cost, lack of qualified personnel and new SEC regulations changed all that. By the 1960's there were thousands of commercial transfer agents servicing public companies and municipalities. The functions of transfer agents and registrars, however went unregulated until 1975.

The Securities and Exchange Commission (SEC) noted that the substandard performance of transfer agents was a significant contributing factor to the paperwork crunch from 1967-1970. Congress responded by amending the Securities Exchange Act of 1934 to require the registration of transfer agents and called upon the SEC to adopt rules and regulations "necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act". Disclosure is the key to these changes. The SEC indicated that shareholder rights need to receive "adequate expression". Compliance with this policy requires establishing lines of communication between the issuer and the owner of a security.

The SEC passed rules to:

assure that registered transfer agents perform their functions in a prompt and accurate manner
provide early warning of inadequate transfer agent performance
apply limitations on the expansion of transfer agent activities when transfer agents are unable to meet the performance standards
assure prompt response to inquires concerning the status of items presented for transfer
require the maintenance and preservation of certain records necessary to monitor compliance

In today's regulated industry, there are over 300 million shareholders serviced by commercial transfer agents, mutual funds and in-house agents. As a result of the consolidation within the industry that began more than 20 years ago, there are now fewer than 25 transfer agents that dominate the business.