Australia

Are Australians taking over the world? I was once on a trip to Alaska and I met a kind of burly, “hail-fellow-well-met” guy, and he made, what I thought at the time (this was around 2001), a very strange comment. Certainly off-the wall.

He said to me “The world is entirely run by 25 incredibly wealthy men in Australia”. Aside from the fact that what we were discussing was in no way related to who was running the world, I was taken aback by the concept itself. Why were they congregating in Australia? And how were they running the world, anyway? Were they a secret organization like James Bond’s SMERSH or SD-6 from ALIAS?

Now, you are probably wondering what in the world this has to do with transfer agents. Here’s what; the largest and the 3rd largest of the U.S.’s stock transfer agents (rumored to soon become the second largest) are owned, not by Americans, but by Australian companies! So, maybe the guy I met in Alaska was right?

Anyway, in case you were wondering, StockTrans is still 100% American owned and operated, and will remain that way! But, if you want to know something really strange, a while back I got a call from someone claiming to represent a THIRD Australian company (an “investment company”) that wanted to purchase a stock transfer agency and wanted to know whether StockTrans was for sale. I, of course, said no--but, Jeez! I mean, I like Crocodile Dundee and shrimp on the barbie as much as the next guy, but, really…what IS going on in Australia?

Off The Wall

Can someone explain to me why AIG and Citibank and all the other banks are getting zillions of dollars while the American car companies have to crawl on their knees to get a few billion (I know, two years ago we would say a billion dollars was a lot of money, but those days are gone…). I mean, at least the car companies actually make something! And they employ people who have skills!


Instead of pushing the car companies into bankruptcy, why not let AIG and Citibank and all the people who played around with credit default swaps and mortgage backed securities go bankrupt? And don’t tell me we need them to survive! We have a lot of regional and small banks as clients who are doing just fine and lending on a regular and fair basis to individuals and businesses. And since no one is going public now any way and very few mega-deals are being done, who is going to miss the giant investment banks anyway? We survived Bear Stearns and Lehman Brothers going under, and I am sure new ones will crop up when they are needed.

I think we should reward the people who have been conservative and ran intelligent risk-analysis systems and let the idiots who got in way over their heads get what they deserve. So go out and do what I did—buy a new American made car and support your country (I bought a Buick Enclave and I think it is a great car)! And, by the way, yes, StockTrans is American owned and managed and is quite solid financially.

StockTrans Comments on Recent Financial Turmoil and its Impact on Transfer Agents

ARDMORE, Pa., Oct 30, 2008 (BUSINESS WIRE) -- Over the past two months, StockTrans has received numerous inquiries about the impact of the recent turmoil in the financial services industry on transfer agents. Today, StockTrans issued a statement providing commentary and perspective on the issues that transfer agents face in this new economic reality.

Jonathan Miller, President and CEO of StockTrans, said, "First and foremost, because of financial difficulties faced by bank-owned transfer agents, there is likely to be significant disruption to many public companies due to the forced mergers and acquisitions of, or worse, the exiting from the business by their transfer agents. As these transactions are consummated, there is likely to be considerable disorder for companies that use bank or financial institution transfer agents because of data system mismatches, personnel layoffs and changes, and, perhaps, the acquiring banks terminating the stock transfer business of the acquired banks."

Miller continued, "In addition, as financial resources are reallocated within banks, there is likely to be diversion of capital spending and customer service resources away from the transfer agent division of their business. This, we believe, will cause further deterioration in customer satisfaction for shareholders of clients of bank-owned transfer agencies."

Miller concluded, "From our standpoint, the fact that StockTrans is an independent, well-capitalized, privately-owned professional transfer agency leads to stability for our clients and their security holders, and presents a growth opportunity for us in this difficult economic period. We are profitable, debt free, and remain committed, as we have for almost 40 years, to stock transfer as our only business, providing service for over 350 clients' issues."

About StockTrans:

StockTrans is an industry leading stock transfer agent and stock benefit plan service provider, helping small and mid-cap companies around the world with their stock transfer and plan administration needs. For more than 37 years, StockTrans has stood out in the stock transfer industry with its unmatched customer service, experienced staff, affordable services and use of the latest technology. For more information, please visit www.stocktrans.com.

Is there a logical balance point between service and price? (Part Three)

Quite a difference in the financial environment since I last posted here (sorry for the delay). During this time, the dangers of having a giant bank or financial services company act as your stock transfer agent, provide your corporate action services, pay your dividends, manage your ESPP’s, act as exchange agent, etc., etc., etc., have become self-evident. Those giant transfer agents have plenty of other things to worry about besides your shareholders (like staying in business, etc.). As a matter of fact, with CDO’s, sub-prime mortgages, credit default swaps going down the tubes, the LAST thing they are concerned about is your company’s stock transfer needs.

Guess what! StockTrans has no investments in CDO’s, sub-prime mortgages or anything like them! We are, as we have been for almost 40 years, totally independent, totally solvent and totally dedicated to stock transfer and stock benefit plan administration alone. Now is really not the time for you to have to worry about the security of your shareholder data. As you are probably aware, one transfer agent has reportedly lost the personal identifying information of as many as twelve-and-half million shareholder accounts! Other agents have outsourced their customer service operations to foreign countries. Is that where you want your shareholder information to be under the current economic conditions? Knowing that foreign markets are in at least as bad shape, if not worse, than ours? Don’t forget, your shareholder’s personal information is worth money to criminals! Do you want to take the risk that someone that you do not know, who is in some country thousands of miles away, operating under stock transfer security procedures unknown to you, has access to your shareholders’ accounts?

At StockTrans, we have multiple layers of data security and personnel security to insure that your shareholder information is never released to anyone except authorized parties. All our transfer agent and stock plan administration personnel are here in the good ole U.S.A. Is your stock transfer agent in the financial condition that it can even focus on your business? Think about it, and feel free to call me to discuss any of these matters.

Is there a logical balance point between service and price? (Part Two)

So, you want to know if this is just another story that’s going to end in “You get what you pay for…” Well, it’s not.

On the low end of the scale of transfer agent pricing, you can certainly save money in the short run. But the longer you stay with the really low-priced transfer agent, the greater chance something will get screwed up, the longer you will go without leading-edge technology, and the longer you and your shareholders will suffer from bad service. Just last week an issuer called us and said, “I can’t reach my current transfer agent half the time! He loses papers all the time! I would like to get a new agent! Can you please help me?”

And now, with the stock exchanges mandating issues to be DRS eligible with DTC (Depository Trust Company), at least some of the low price agents will not meet DTC eligibility, and therefore, cannot provide you with the required DRS eligibility. And what about insurance and fiscal stability? Do you know how secure your data really is? Are you protected if one of these low-priced agents makes a mistake, or worse?

Of course, you can find a really cheap transfer agent-you can find a really cheap anything!
But no, I’m not going to say “You get what you pay for”, because when you go for the lowest-cost provider, you are not going to get what you pay for –you will get either less than you pay for, i.e., no service, no insurance, etc., or more than you paid for, i.e., trouble!

Next post I’ll tell you why you also don’t get what you pay for if you go with the highest-priced spread!

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.