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PAPERLESS LEGALS PROJECT CONCEPT

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The Project goal is the elimination of Transfer Agent examination, approval and retention of documents that accompany requests for non-routine transactions, commonly known as “legals”. A change to the existing process will benefit investors and the Securities Industry, as a whole.

Guarantors will be relieved of the tasks of duplicating and mailing supporting documents to separate Transfer Agents for the same customer. They will also be relieved of the necessity of dealing with processing differences caused by variances in individual Transfer Agent requirements and they will experience a reduction in rejects and “reject fees”. Transfer Agents will benefit from significant processing efficiencies in their operations, legal/paralegal, and document retention areas. Lastly, investors will no longer be faced with lengthy, sometimes confusing and frustrating, securities transactions.

The basis for changing the current, centuries old process, is the protection afforded Issuers and Transfer Agents within Section 8-306 of Uniform Commercial Code which spells out the warranties of the Guarantor:

...at the time of signing,
(a) the signature was genuine; and
(b) the signer was an appropriate person to indorse; and
(c) the signer had legal capacity to sign.


Counsel for STAMP, Inc. and various Commercial Transfer Agents have determined that the UCC language is protective and sufficient to warrant the proposed change. Furthermore, the New York Stock Exchange, Rule 210 contains almost identical language covering the warranties of members who act as Guarantors. Representatives of the NYSE have been kept up to date with the progress of the Project.

Counsel for STAMP, Inc. has reviewed the language contained in the current Medallion Program Documents and determined that no changes are necessary to accommodate the Project. Furthermore, STAMP, Inc. is aware of a landmark case involving inappropriate documents contained in a “legal transaction”. The Transfer Agent clearly erred in its examination and acceptance of supporting documents and a wrongful transaction resulted. Regardless, a claim against the Guarantor was made. After review and discussion with its Surety Company, the Guarantor acknowledged its responsibility and paid the claim, in full. This case did not involve a legal judgement and does not constitute precedence. However, it is a clear indication of the effectiveness of Section 8-306 of the Code and Medallion Guarantee Program Documents.





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