An SEC Registered Transfer Agent
Outsourcing transfer agent services to a vendor that can handle a fund’s expanding transfer agent and portfolio accounting needs while also managing document management, data security and compliance is a sound business decision.
A transfer agent is an agnostic third party employed by the issuer of an investment product. The transfer agent processes new investments, keeps track of the ownership of shares, executes transfers in ownership, keeps track of the issuer’s shareholder database, cancels and issues certificates and distributes dividends and other payments to investors. Because the transfer agent acts as a conduit between issuers and security holders, the efficient operation of the transfer agent is essential for new investments, transfers and secondary market trades to be completed successfully. Securities and Exchange Commission (SEC) rules and regulations govern transfer agent operations and are designed to facilitate the timely and accurate clearance and settlement of securities transactions, as well as to ensure the security of shares and invested funds. Registration, inspections and rules governing transfer agents are intended to protect investors from errors and omissions in transfer agent processes.
Most transfer agents must be registered with the SEC. A transfer agent is, in some cases, a bank. A transfer agent bank must register as a transfer agent with a bank regulatory body according to Section 17A(c) of the 1934 Act. Transfer agents are not governed by a self-regulatory organization. As a result, the SEC has issued rules and regulations for all registered transfer agents, with the goal of facilitating the timely and correct clearance and settlement of securities transactions while also ensuring the security and safety of investment shares and funds. Minimum transfer agent performance standards exist. A transfer agent must meet these standards in the issuing of new shareholder certificates as well as related recordkeeping and reporting. A transfer agent must perform fast and correct production of shareholder records and the preservation of securities and funds. The SEC also inspects transfer agents.
Before registering as a transfer agent, an organization must meet all the applicable provisions of the Securities Exchange Act of 1934, the Securities Act of 1933, and the Investment Company Act of 1940, as well as the applicable rules made by the SEC under those acts.
There is a transfer agent registration process as well as the annual reporting requirements for registered transfer agents.
Registration as a Transfer Agent
Any transfer agent who wants to cancel their registration as a transfer agent must notify their ARA in writing. If the SEC is the ARA, the transfer agent must file a notification of withdrawal from registration on Form TA-W, following the requirements on the form.
Annual Reporting Requirements for Transfer Agents
Every registered transfer agent, including those whose appropriate regulatory agency is not the SEC, is required to file an annual report on Form TA-2 with the SEC detailing their previous year’s actions.