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