IS THERE A LOGICAL BALANCE POINT BETWEEN SERVICE AND PRICE???

First--The Shape of the Stock Transfer Industry Today:

The U.S. stock transfer agent industry, in terms of size of agents, has evolved into a Hershey’s Kiss® shaped array. There are many (hundreds) of small transfer agents, often mom-and pop operations, with very little overhead. They may operate out of their homes, or carry little or no insurance, or have no employees, offer very limited service, or not be DTC eligible, etc. Because of these restrictions, some of them charge very little.

Then there are about ten mid-sized agents that offer full transfer agent services, and even fewer mid-sized agents, like StockTrans, that are technologically equal to any large transfer agent. (Forgive me for adding, in a pat to our own back, that StockTrans is one of the very few stock transfer companies of any size that also offers full stock benefit plan administration and self-administration software, both with broker-neutral online exercising capability for plan participants).

Then there are five or six mega-agents, with clients in excess of 500 all the way up to 3,000 or more. (In case you didn’t know, by the way, two of these mega-agents are actually owned by foreign companies).

Anyway, do you get the Hershey’s Kiss® picture? That is the shape of things in our industry.
So-- what do you get on the cost vs. service scale of this odd breakdown of stock transfer agents? Not always what you would expect! I promise I’ll tell you exactly what you should expect in my next post. And maybe even a recommendation of which transfer agent you should use…

Dubious Contests Awards vs. Who’s Number One?

If you look at a number of stock transfer agents’ websites or advertising material, you will find a blurb about how they won this “stock transfer” award, or came in first in that survey of stock transfer agents’ clients, or “placed” in the top five of some other beauty contest. And some of you might wonder why you don’t see something like that on our site. Well, there are several reasons.

First, the way that most of these “impartial” surveys work is that you have to pay a “consulting fee” to the survey takers, or the prize sponsors to be in the “survey” or to be in contention for the “award”. Now think about it; how impartial or comprehensive can such a contest be, if the only transfer agents who are “entered” are the ones who are willing to buy their way in? Obviously, that leaves out a lot of other agents who refuse to participate in that kind of nonsense. And if you look at the dates of some of these contests and awards, you will see that they are from several years ago, because even those transfer agents have decided to stop participating in these charades.

Second, (that was a long “first” wasn’t it?) the rankings are often preordained by the way the various surveys are conducted. For instance, the larger agents can just submit the names of the clients they know will give them a great reference, ignoring the clients they have messed up, and the smaller agents often only submit one or two clients who, for all you know, they may be related to. I mean, what does it prove if one client ranks you at the top of every category? And of course, you are not told by the transfer agent when they post their “Award” how many clients actually responded!

So, what about StockTrans? Well, we think the best way to rank an agent is by the loyalty of their clients. StockTrans is still proud to say we have never lost a client due to service dissatisfaction! We have lost clients who have been bought, gone out of business, or who, because of financial difficulties, have been willing to give up service for a lowball provider (although these often come back to us when they are in better financial shape). We even once lost a client that thought we weren’t “big” enough to handle them, much to their subsequent dismay when they found out “bigger” does not mean the same as “better”. Can you think of a better measure of service than the fact that our clients are unshakably loyal to StockTrans? Many of our clients have been with us for every day of their “public” lives, going back decades!
Ok, and for those of you who are dying to know, yes, a few years back we did enter one of those surveys; only we submitted all of our clients’ names. And the result was that of all the small to medium- sized transfer agents (who received more than just one or two hand-picked clients’ responses) we were, of course, number one.

Something interesting happened here recently

Something interesting happened here recently. Our Director of Sales, Thomas Schneiders, came in to my office and said that when he was talking to a prospect (now a client), he explained that one of the differences between StockTrans and other transfer agents was our StockTrans Concierge Services. I asked Tom what he meant by that, because I had never heard that term in relation to stock transfer agents before.

Tom said “All the extra things and services that we offer to our clients that other stock transfer agents don’t, because of the length of time we have been in the stock transfer business, and because of the special market niche we fill. Like pointing our clients to who we think is the best vendor for them, based on our years of experience of being able to view the clients’ satisfaction through their eyes.” I said, “What kind of vendors are you talking about?” Tom said, “Good captive brokers for their stock benefit plans, investor relations firms, expert legal counsel, financial printers, PR agencies, and the like. You know, because we have been around so long, we know who is good for small to mid-cap companies, and who isn’t.”

That made me think: and here comes the interesting part (at least as far as we, as a stock transfer agent, are concerned). For years and years, I have been trying to figure out a way to describe the special care and personal involvement we provide all our clients, but I couldn’t put my finger on the right phrase.

I think Tom has done it; from our holding your hand through your annual meeting, to our real, live, experienced professionals who answer the phone, to assisting your shareholders when they want to sell their DRIP shares, to helping you set up an Employee Stock Purchase Plan, to offering the world’s greatest stock benefit plan full administration services and self-administration software, to answering all you shareholders’ questions with personal attention, to monitoring the time constraints of your SPAC, to helping you in your acquisition of another company, to easing the way for non-U.S. shareholders to transfer their shares, to explaining to you what the advantages and disadvantages are of participating in the DRS system vs. just being eligible for DRS, …well, you get the point.

StockTrans Concierge Services! That is who we are and what we do, and we’ve been doing it for almost 40 years! So, to Tom, for coming up with the perfect description of how StockTrans is different from all the other stock transfer agents-thanks, young man- I owe you one.

The History of StockTrans - Part Three

So, how did we break through the stone wall put up by the big banks that dominated the industry? Funny you should ask… (Excuse the six month delay-I wasn’t in suspended animation. Au contraire! I was guiding us through the busiest year we’ve had in our 35 years. We’ve grown over 30% in just the past 12 months!).


By now, everyone knows that small businesses are the backbone of our economy-not just because they create a majority of our jobs, but because they sometimes grow into very big companies. In other words, (almost) every very big company started as a very little company. Well, back in the 70’s it wasn’t so obvious to everybody that small companies were indeed very important to our economy.


And none of the big bank agents were really serving the small companies. Oh, they had them as clients, all right, but they weren’t serving them. It was more like “You’re lucky we are taking you on as clients, so just be quiet and send us your money. We make you look good just by letting you mention our name in the same sentence as ours!”
Well, when there wasn’t much of a choice, there wasn’t much a small public company could do. There were some outliers in the transfer industry, of course, but the bigger non-bank agents wanted to be just like the bank agents, and the cowboys out west, were, at the time, let’s say…cowboys.


All of which leads us back to the question of how a very small transfer agent, in the heart of the financial megalopolis, headed by someone who, just like you, did not say as a child “Gee-when I grow up, I want to be a stock transfer agent!” , could establish itself in the “World of the Giants” (echo, echo, echo…). The answer was obvious to me and to anyone else who wasn’t inhaling through the 70’s—SERVICE! DUH! Something that was sorely missing at the time for all but the largest public companies.

The History of StockTrans - Part Two

The most interesting aspect of the stock transfer business is the interaction with the whole world’s businesses. There is no kind of business in the world that does not have one of its players in the public company arena. And that means, of course, that StockTrans, Inc. has, or has had, stock transfer clients in every field of enterprise.

Perhaps the greatest educational element in our long 35 year history as a stock transfer agent has been what we have learned from the huge variety of our transfer agent clients. From companies that froze prize dogs ‘ -ahem- seminal fluids for future use in breeding, to the first company to sell CD’s over the internet, to french fry vending machine dreamers, to gambling in casinos from the sky, to bio-pharma companies working on new drugs for every illness you have ever heard of and many you haven’t, to national retail chains, to cruise lines, to the pre-cursor to AARP, to the first online traffic website, to the offspring of Gallup polling, to banks, investment companies, REITS, to nanotechnology, to cosmetics, to weight loss programs, to….well you get the picture.

What a great country! Almost everyone wants to be public! And anyone can get a chance. And they are all interesting companies in their own way, run by interesting people who need and deserve excellent stock transfer services at a fair price. Which of course, is where StockTrans, Inc. comes in?

But, let's go back to the late 70’s, when we were young. As I mentioned before, when I started working for the investment bankers, we were doing the stock transferring for the public companies we controlled or had significant interests in. Around 1974 or 1975, it occurred to me that there were a lot more micro and small to mid-cap companies out there than there were New York Stock Exchange companies. Yet the majority of these smaller companies were being handled by the giant bank transfer agents, and, most of the time, paying the same prices as the larger companies. But, and this is a big but, (sorry all you gangsta rappers but we aren’t talking about the same thing) they were getting service like, well, like they were at the bottom of the heap. So, I decided to try to get some stock transfer clients that weren’t part of our “captive” companies. I mean, if you are paying big bucks and getting lousy stock transfer service, why wouldn’t you be interested in someone who would reverse that situation for you. Simple, basic transferrian logic, right? Well…not so fast…

The History of StockTrans - Part One

1972- I had just graduated from Penn State the year before and now I found myself working for a small, privately-held investment banking firm—if you can call four men and a woman an investment banking firm. What we did was find public companies that were in financial difficulty and try to turn them into thriving companies with a strong presence on whichever stock exchange they were trading. Of course, being low man on the totem pole, I was assigned to perform the stock transfer functions. Believe me, being a stock transfer agent in 1972 was a universe away from being a stock transfer agent today.

In those days, stock transfers were done by hand-and I don’t mean just issuing physical stock certificates. Whenever a share of stock was bought or sold, it came in to the transfer agent from the broker or the actual owner in to the stock transfer agent for that public company. Although a few giant banks had massive main frame systems that were really designed for banking services, which systems they tried to twist and contort into use for stock transfer and shareholder data maintenance, for the most part, the greatest part of shareholder and stock transfer data was kept on 3x5 or 5x6 cards.

Yes, there were IBM punch cards, but, by their very nature, they couldn’t give you any information at a glance, because all you saw were holes (or not holes) on a card! I guess the few of us who have been in the stock transfer business as long StockTrans can claim some of the dubious distinction of being the fathers and mothers of the infamous “hanging chads”. Take that Larry Birkhead and Howard K. Stern!

Back then, bank stock transfer agents controlled probably 90% of the stock transfer business (you remember Manufacturers Hanover, Harris Bank, First Chicago, State Street Bank, First Pennsylvania, Barnett Bank, Chemical Bank, Chase Manhattan, Crocker Bank, Morgan Guaranty, Continental, Marine Midland, etc., etc., etc.), don’t you? Well, if you don’t, maybe you’re not quite as old as I am. Someday I’ll give you a list of the stock brokerage firms that are long gone. You can look at it if you are having trouble sleeping.

Anyway, up until the early 1970’s, when StockTrans was just a gleam in my eye, there wasn’t a lot of room in the stock transfer business for commercial non-bank agents (aka commercial independent stock transfer agents) but there were always the smaller public companies who either couldn’t afford and/or didn’t want the impersonal service of the large bank stock transfer agents. You have to understand that stock transfer was a sideline for those banks, and a not very important sideline at that. The reason the banks controlled so much of the stock transfer business was that every time they made a loan or did some kind of financing for a public company client , the bank would try to grab all the ancillary business they could squeeze out of their now-debtor client. And the bigger the public company, the bigger the debt to the bank and the more of the stock transfer business would be forced into the hands of the large bank stock transfer agents.

Jonathan Miller - President

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