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LawCast – Seth Farbman of VStock Transfer Talks Transfer Agent Responsibilities - YouTube
Channel: LawCast
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I am attorney Laura Anthony founding partner
of Legal & Compliance, a full service corporate,
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securities, and business transactions law
firm.
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Today is a special LawCast segment featuring
Seth Farbman, chairman of VStock Transfer,
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one of the nation’s leading stock transfer
agencies.
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Over the last 15 years, Mr. Farbman has serviced
over 3,000 publically traded companies.
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In addition to traditional transfer agent
services, VStock provides services related
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to IPOs, proxy statements, annual reports,
services for shareholder meetings and DTC
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eligibility.
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Mr. Farbman is a licensed attorney in New
York, and is currently chairman of several
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other corporate service ventures.
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Mr. Farbman says: “Laura, first of all I
want to thank you for having me on LawCast.
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I’m a huge fan and I think it’s a great
resource for people to learn about securities
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law.
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So I appreciate the opportunity.
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Laura, you asked me to speak about a topic
near and dear to my heart, about a transfer
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agent and why the role is so critical to have
a quality transfer agent and clear communication
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between a public company, a company that is
contemplating going public, to shareholders
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and the role of the transfer agent.
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So, this short message is really going to
be directed towards new-comers.
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It’s applicable both towards people that
are entertaining going onto the OTC or NASDAQ,
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but it’s really more for those who haven’t
had exposure to working with the transfer
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agent previously.
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You know, I’ve had people come up to us
and they say, ‘I don’t understand.
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I have a lawyer, I have an auditor, I have
a banker, why do I really need a transfer
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agent?
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I mean, after all I have everything in a pretty
messy Excel but it’s there.
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so, why can’t I continue down that path?’
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So, the answer is, even if you wanted to,
you couldn’t because the role of the transfer
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agent really serves two functions.
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A transfer agent with one hat has to serve
the issuer, the company, and by that, I mean
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the transfer agent will handle all instructions,
it’s really an extension of the issuer,
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from an administrative standpoint.
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So, things like when the company wants to
issue shares, when it issues preferred shares,
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options or warrants, perhaps to the board
members, there’s an annual meeting and their
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shareholders communications, voting tabulation,
things like that are very often handled by
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the transfer agent.
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So, on the one side, you’re dealing with
the company’s needs, but equally as important
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is sometimes, well, let’s just say, equally
as important.
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You’re also servicing the needs of their
shareholders.
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And those tasks vary as well.
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On a day to day basis, the processors and
the customer service teams, at a transfer
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agent will answer questions by shareholders
that deal with ‘I don’t want to break
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up my shares, how to deposit my shares, I
want to gift my shares.
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My personal favorite, I lost my stock certificate.
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What do I do?’
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And what I found is that, although some days
I feel that the stock transfer agent is at
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the low end of the totem pole in terms of
services that a company needs while it’s
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public.
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At the end of the day, it really is a very
critical component because they serve at hub
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of the interaction between the company, the
shareholders, and any type of corporate actions.
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So, whether it’s with the OTC or FINRA or
DTC or the clearing firms, very often that
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transaction, is dependent upon the communication
that goes through the transfer agent.
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Now, when does the role of the transfer agent
begin?
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So, we often tell people that the earlier,
the better, because what we do is, as any
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transfer agent does, is that they take the
shareholder data that you have, upload it
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to the system, hopefully provide you with
online access, so that that data is always
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at your fingertips.
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It’s funny, I had a story a couple of years
ago, a guy sent me his shareholder data, and
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I was looking at the list that I had some
pretty impressive people on it, it had like
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Bill Gates and Steve Jobs and had celebrities,
and I said to him ‘where did you get such
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an impressive list of shareholders?’, so
he said, ‘Oh, you wanted existing shareholders?
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I gave you a list of people that I wanted
to have as shareholders.’
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So, as a transfer agent we can only do so
much.
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But that is where we take on the role.
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We take your existing shareholders, we upload
it and, in going forward, any purchasers that
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you may have in a private placement or what
not, those we will be instructed by you to
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issue and to process.
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At the end of the day though, we really do
take an administration burden off of the company.
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We’ll provide you as any transfer agent
would, with a much more uniform process of
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maintaining your ledger a lot more accessible
than Excel sheet, and we take instructions
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from you whether or not a company prefers
to have their issuance done in certificate
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form or book entry form.
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And the most important thing for you to recognize
is that our job is to be compliant for our
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benefit but also for yours.
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Because every transfer agent in the industry
to be in good standing, is audited by the
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SEC. and so our books and records have to
be in great shape because it is a reflection
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of you, and it’s a reflection of that transfer
agent.
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And so those are the basic tasks or services
of any transfer agent.
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Above and beyond that, there are some misconceptions
that I think people have which, hopefully,
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i’ll have an opportunity to adjust in some
future LawCast.”Thank you Seth for joining
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us today.
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I am securities attorney Laura Anthony, founding
partner of Legal & Compliance, and producer
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of LawCast.
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Should you have any questions about today’s
topic, please visit SecuritiesLawBlog.com
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and LawCast.com, or contact me directly.
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Inquiries of a technical nature are always
encouraged.
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