Are you thriving in this economy or barely surviving? The public marketplace is inundated with new regulations. Are you stepping up to the plate or holding back waiting to see what’s still there as the dust settles? I’m sure many of you are worried. I can’t say there is no value in being concerned. I will attempt to clarify the largest issue facing many of you.
Brokerage firms are refusing to allow shareholders to deposit certificates:
If your company is priced at the penny-stock level (or between $1.00 and $5.00 at some brokerage firms) and quoted only on PinkSheets or the OTC Bulletin Board and you have not kept current with quarterly postings of your financial information, the majority of brokerage firms are not allowing your shareholders to deposit their certificates into their accounts. Some brokerage firms are actually returning certificates to shareholders. In addition, if you are not already DTC-eligible, FAST-eligible, and willing to participate in DRS, the Depository Trust and Clearing Corporation is not accepting any new companies into the FAST system if there has been any hint of problems with your company in the past. In January, FINRA (Financial Industry Regulatory Authority) issued a directive to all brokerages and clearing firms cautioning them to perform additional due diligence when accepting any stocks for deposit that are typically “large amounts of thinly-traded, low-priced shares in the over-the-counter market.” They listed ten specific red flags to watch for regarding deposits of any penny stock issues. Instead of performing the additional due diligence, which many firms found too costly, those same firms set policy to refuse trading in any of these issues. The Securities Transfer Association has brought notice of these consequences to FINRA but it is unknown whether FINRA will issue any type of clarification to their directive or let it stand as is. It is time to upgrade to a higher market. NASDAQ, being a listed market instead of a quotation service, appears to be the best option.
FAST/DWAC/DRS fees have gone down!
As these newer programs have settled into the everyday, the costs to run the programs have also decreased. No longer must we charge you $250 additional to your monthly fees. We are now able to adjust our fees and charge you only $250 for the total of monthly services for active companies. This monthly charge, starting September 1, 2009 for everyone, now includes certificated activity, book entry/electronic activity, DRS (Direct Registration System) services for your shareholders, and unlimited Internet access (by password only) to your account for all shareholder lists and transfer activity reports. If you are not already signed up for the Linkstar Internet access, please do so now. For certificated issuers, without access to the FAST/DWAC/DRS system or our software Internet provider, our charge is still $75.00 for inactive and $150.00 for active companies. (Presenter fees still apply for holders and brokerage presentments.)
Lost Shareholder Searches
Many of you were invoiced for the first time for the lost shareholder searches we have been performing on your behalf for the past 3+ years. The SEC mandates that we perform these searches in order to allow all shareholders the right to gain possession of shares that are rightfully theirs. If the shareholder cannot be found due to an incorrect address, the shares must then be escheated to the appropriate state as unclaimed property. Because this is a lengthy process, you are not invoiced until our search has reached the point where we must access an automated database, like TransUnion. If a shareholder is found prior to our accessing the database, the fee is only five dollars per shareholder. Once the database is involved, the fee increases to fifty dollars per shareholder for the search itself and the escheatment to the appropriate states, if necessary, remains free of charge. If any of you would like to be notified prior to our accessing the database for your shareholders, please let us know. It may save you fees in the long run.
Your Next Proxy, “Notice & Access”, and Virtual Annual Meetings
During this last proxy season we saw many companies not able to reach quorum because of the low response to Internet voting. As you approach next year’s annual meeting, in order to meet quorum you may want to send physical materials to your largest shareholders who consistently vote and allow your smaller holders to use the Internet for Notice and Access to voting. It is still best to allow approximately 90 days between the first notification to your vendor and the date of your meeting. Please try not to allow Broadridge too much involvement with your proxy other than providing your NOBO list. They continue to charge more than every other competent vendor in the industry. First American has built a wonderful relationship with a local printer, and due to this relationship, we are able to underbid most other vendors and provide exemplary proxy services for you. For more details you may contact us. In addition, in order to cut down on the costs of a meeting, many issuers are now offering the ability for their shareholders to attend the meeting, via a webcam, for a “virtual” meeting. This saves tremendously on travel and accommodations, but also provides stronger attendance and election support. Keep it in mind!
We now manage Direct Stock Purchase Plans, Cash Dividend Disbursements, Dividend Reinvestment Plans and Stock Option Programs!
Many of you have asked for these services and, until now, we were not able to provide them. But as our companies have grown, so have our services! Before any of you pursue either the stock purchase or the stock option plans, however, it would be worthwhile to first perform an odd-lot program to clean up the fractional lots. One of the best ways to do this is to offer any of the shareholders with odd-lots the choice to either sell their shares back to the company for a nominal price, but more than the market OR to sell them additional shares at below the market to bring their lots up to a round figure.
Renegotiating Fees and New Contracts
If you are interested in renegotiating your terms or fees with us and are willing to sign a three-year contract to guarantee the terms and fees, please contact us. In the past, our contract has been more open-ended and when we have had to raise fees, you had less power to negotiate them. We are changing this format for those of you who want more power in the relationship. The program is optional but if you are interested, please let us know.
Helping the Homeless in Phoenix
First American Stock Transfer has always been dedicated to the community. Since the economy has forced so many from their homes, First American has chosen to give time and money to the UMOM New Day Center. UMOM New Day Center houses entire families who have been displaced through foreclosure or other reasons. Recently they bought a large hotel property across the street from their current campus and are now renovating the property. When completed they will have the capacity to house approximately 300 families while providing training to get those same families back on their feet. What a blessing to be able to help others!!
We hope all of you are making healthy transitions into the future of this industry. If you have any questions or need referrals, please do no hesitate to contact us.