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Investor Information

As an individual investor, you now have three choices when it comes to holding your securities. You may: 

  • have your security registered in your name on the issuers books and receive a physical certificate;
  • have your broker-dealer hold your security in book-entry form under street name registration;
  • or  request the issuer1 hold your security in book-entry form under direct registration. (Note: because this is a new form of registration, you should consult with the issuer or your broker-dealer to learn if this option is available.)

Physical Certificate

You may have your security registered in your name on the books of the issuer and receive a physical certificate. You should safeguard this certificate until you sell or transfer it because if you lose your certificate, you will be charged to replace it. As a registered owner, you receive dividends, annual reports, proxies, and other mailings directly from the issuer.

Street Name Registration

You may have the security registered in street name and held in your account at your broker-dealer. Under street name registration, your ownership is recorded on your broker-dealers books and not directly on the issuers books. While you will not receive a certificate, your broker-dealer will send to you at least four times a year an account statement that lists all your securities at the broker-dealer. Your broker-dealer will credit your account with your dividend and interest payments and will provide you with consolidated tax information.  Issuer mailings such as annual reports and proxies will be sent to you from your broker-dealer. 

Direct Registration

Direct Registration allows you to have your security registered in your name on the books of the issuer without the need for a physical certificate to evidence your ownership. While you will not receive a certificate, you will receive a statement of ownership and periodic account statements, dividends, annual reports, proxies, and other mailings directly from the issuer. (Uncertificated, book-entry registration has been widely used in the mutual fund industry for many years.) While it is solely your decision how to hold your securities, you should carefully review each of the alternative forms of security registration and should consult with your financial advisor or broker-dealer to determine which form is best for you.

You can change the way in which you hold your securities at any time.


Frequently Asked Questions
 

What is the Direct Registration System?

The Direct Registration System, or DRS, is a system that enables an investor to electronically move his security position held in direct registration book-entry form back and forth between the issuer and the investors broker-dealer.

After I make my decision on how I want to hold my security, what do I do?

Direct registration is a relatively new method to hold corporate equity, and not all issuers currently offer this option. You should check with the issuer or your broker-dealer to find out if the issuer offers direct registration.  If you are purchasing a security, tell your broker-dealer you want to hold your securities in direct registration.  If you currently hold a certificate, you can mail or take your certificate either to the issuer or to your broker-dealer with instructions to change to direct registration. If you currently hold your security in street name registration, you can instruct your broker-dealer or the issuer to move your security position to the issuer for direct registration. In any situation, you will receive a statement of ownership from the issuer acknowledging your DRS book-entry position once the change has been made .

If you want a certificate or if you want to use street name registration, tell your broker-dealer your choice at the time of purchase. If you elect a certificate, one will be sent to you. If you chose street name registration, your broker-dealer will send you a confirmation and periodic account statements acknowledging your owner-ship.

If you currently hold a certificate, you can deliver the certificate to your broker-dealer with instructions to change your registration to street name registration. If you currently hold in street name registration, you can tell your broker-dealer to obtain a certificate for you.

What do I have to do to sell my security?

To sell a security held in direct registration, you can:

    1. instruct the issuer to sell your security (many issuers have programs in place to accommodate sale requests); or

    2. instruct your broker-dealer or the issuer to electronically move your security to your broker-dealer for your broker-dealer to sell; or

    3. request a physical certificate and deliver it to your broker-dealer to sell.

To sell a security held in street name registration, you can:

    1. instruct your broker-dealer to sell your security; or

    2. request a physical certificate and deliver it to another broker-dealer to sell; or

    3. instruct your broker-dealer or the issuer to electronically move your security to the issuer for the issuer to sell (many issuers have programs in place to accommodate sale requests) or to electronically move to another broker-dealer to sell.

To sell a security for which you hold a certificate, you can:

    1. deliver the certificate to your broker-dealer with your instructions to sell or

    2. deliver the certificate to the issuer with instructions to change how you hold your security from certificate to direct registration and to sell (many issuers have programs in place to accommodate sale requests).

When selling a security through the issuer, the issuer will sell your security under the terms and conditions in place for that issue. For example, some sell orders will be executed on the day the issuer receives them, and some orders are aggregated for frequent, but not daily, execution. (Note: you should ask the issuer if it offers a selling service and what the terms and conditions are.) Proceeds from the sale will be mailed to you three business days after the date of sale.

When selling through your broker-dealer, your instructions will be acted on immediately and in accordance with the guidelines it provides to you. Proceeds from the sale will be made available to you or credited to your account three business days after the date of sale.

Can I place a limit order? Market order? Stop order?

Only a broker-dealer can execute a limit, market, or stop order.

What about my relationship with my broker-dealer if I use direct registration?

You can maintain your relationship with your broker-dealer regardless of your choice of registration.

  • When you purchase a security to hold in direct registration, you can tell either your broker-dealer or the issuer to include pertinent broker-dealer information in the issuers records.
  • If you do not have your broker-dealer information included in the issuers records at the time of purchase and later want to or if you want to change the broker-dealer information in the issuers records, you may do so. You should contact either your broker-dealer or the issuer to obtain information on the procedures and the documents required for such actions.

You should note that to change or add a broker-dealer at the time you choose to sell your shares through your broker-dealer could create a delay in getting the securities to your broker-dealer in time for settlement.

If I hold certificates and there is a stock distribution, will I get a certificate for my additional shares?

If the issue is eligible for direct registration, you will probably receive a statement of ownership instead of an additional certificate. You always have the right to request and receive a certificate or to electronically move your securities to your broker-dealer.

What are the fees associated with direct registration? street name registration? a certificate?

There are no fees charged by an issuer for direct registration. However, because broker-dealers offer differing services and plans, you should contact your broker-dealer to learn what, if any, fees it charges.

If I opt for direct registration, what happens if I lose my statement of ownership?

If you ever need a duplicate statement of ownership, you should contact the issuer which will mail you a new statement of ownership.

What happens if my certificate is lost or stolen?

You should immediately notify the issuer of the loss or theft and request a replacement certificate. If you have an account with a broker-dealer, you can ask your broker-dealer to notify the issuer on your behalf. Other financial institutions where you have accounts, such as banks, may also notify the issuer for you at your request.  The issuer may ask you to complete an affidavit explaining the circumstances of the loss or theft. You will have to pay the cost of an indemnity bond to protect the issuer against future claims on the certificate. (Indemnity bonds usually cost approximately 2% of the value of the securities.) If you find your original certificate after you have received a replacement certificate, you should immediately return it to the issuer or your broker-dealer.

How are my securities protected if I chose street name ownership?

Nearly all broker-dealers are members of Securities Investor Protection Corporation (SIPC). As a result your securities and money held at your broker-dealer are protected up to $500,000 with a $100,000 limit for cash. Many broker-dealers also carry insurance in excess of SIPCs coverage. However, SIPC does not protect you against losses caused by a decline in the market value of your securities.

If needed, your periodic account statements and confirmations are sufficient to establish your claim with SIPC for securities and money. You should keep those records in a safe place in the event that you need to file a claim with SIPC. If you want to confirm that your broker-dealer is a member of SIPC, you should call SIPC at (202) 371-8300 and ask for the Membership Department.

Footnote:

Some issuers use transfer agents to keep their security holder records, cancel old certificates and issue new certificates, and mail such things as dividend and interest payments, annual reports, and proxies. When this brochure refers to an issuer, it includes the issuers transfer agent if the issuer uses one.

This is the Official Pamphlet Prepared by the Ad Hoc Committee on Direct Registration:

Corporate Transfer Agents Association
Depository Trust Company
Securities Industry Association
Securities Transfer Association