Looking Back


The recession is declared as over, financial markets are more stable and some credit is cautiously flowing again, but unemployment remains stuck near 10%, economic growth isn’t high enough to create enough jobs and hardworking families continue to struggle. If you’ve made it through, give yourself a pat on the back!

Despite the hardships, however, the U.S. achieved a vital milestone in economic recovery. On July 21, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. The Act is set to provide a much-needed framework for financial regulatory reform. It is truly the most sweeping reform of our industry since the Great Depression with key provisions that will help prevent another financial crisis from damaging our economy and our country again. The Financial Stability Oversight Council now oversees our markets and helps to manage risk. This same entity also has orderly liquidation authority to wind down large, interconnected financial institutions and therefore head off uncertainty that choked our markets in fall 2008 and into 2009. There is a fiduciary standard being studied and more markets support and/or mandate stronger transparency and oversight.

Going Forward

For the next two to five years, the U.S. Securities & Exchange Commission will be writing and implementing approximately 270 new regulations already made law through the Dodd-Frank Act, 69 of which are under the authority of the Division of Trading & Markets. It’s a massive undertaking and we will keep you in the loop for any regulations that directly affect our issuers.

In addition, the IRS has implemented the final regulations of the Cost Basis Reporting Law. For any issuance or transfer of shares that occurs on or after January 1, 2011 (two weeks from now) we will require the cost basis to be included in our system. In the past, shares that were gifted typically slipped under the radar of the IRS. Now, if shares are being gifted, we will require the donor’s cost basis and the fair market value on the date the shares were given. The IRS will fine and penalize all issuers and transfer agents who do not record, maintain and pass along this information where needed. For any of the appropriate forms to complete, please use the forms listed on our website. All previous issuance resolutions and transfer request forms are now obsolete and considered null and void.

Many, but not all, of you are aware that I wrote a textbook for our industry. It is an “easy read” type of book because I wrote it in plain language, not legalese. If, as an issuer, you have ever had any confusion about the securities industry as a whole, how shares get from point A to point B, and how all of the different entities interconnect then

this can be a good reference for you. (It will not teach you how to make money in the stock market, however! That concept I’ve left for other writers!) So far, it is being used
as a training guide for other independent or in-house transfer agents and paralegals in law offices. It is also being sought as “additional reading material” for college courses centered on securities investments. If any of you still want to acquire one of the books, there is a 20% discount offered until the end of the year if you buy it directly from us. We will be extending that discount past the end of the year only to our issuers. And, of course, you may also buy it on Amazon. The name of the book is “A Practical Guide For the Transfer of U.S. Equity Securities” by Salli Marinov.

All of us at First American Stock Transfer wish you the best of holidays and health and prosperity in the coming year.

Salli Marinov