Today, the Commission issued an advanced notice of proposed rulemaking (ANPR) for new requirements for transfer agents, together with a concept release requesting public comment on the Commission’s broader review of transfer agent regulation.
Over the course of the last year, various Commissioners, including Commissioner Aguilar, had noted that the Commission’s regulation of transfer agents had not been reviewed or updated in quite some time. Commissioner Aguilar and former Commissioner Gallagher had urged the Commission to review its regulations relating to transfer agents. The Commission and FINRA have been focused for some time on the incidence of microcap and small cap fraud. In some instances, closer regulation of the activities of transfer agents might have served to prevent, or perhaps to detect, certain transfers of restricted securities. Also, many of the new offering exemptions require that issuers retain the services of a transfer agent. This is the case, for example, with the final crowdfunding rules.
The Commission’s press release notes that, “The Commission also identifies in the ANPR certain areas in which it intends to propose specific rules or rule amendments, including registration and annual reporting requirements, safeguarding of funds and securities, antifraud requirements in connection with the issuance and transfer of restricted securities, and cybersecurity and information technology, among others. The concept release seeks comment on a broader range of issues to help inform the Commission’s consideration of additional rulemaking. These include the processing of book entry securities, bank and broker-dealer recordkeeping for beneficial owners, administration of issuer plans, outsourcing and the role of transfer agents to mutual funds and crowdfunding.”
The release is available here: http://www.sec.gov/rules/concept/2015/34-76743.pdf.