STA guidance during COVID-19 business continuity planning
As our industry plans and implements interim solutions during the effort to contain the novel coronavirus pandemic, the STA Board of Directors would like to assure STA members that we are meeting regularly with industry and regulatory leaders to monitor the changing landscape. As you enact your own planning, we recommend all transfer agents remain vigilant regarding risk management and fraud prevention. The risk of fraud increases substantially during periods of turmoil and ambiguity such as we are experiencing. As an industry, we should not be precipitous in relaxing standards for Medallion guarantees and documentation at a time when increased diligence becomes even more crucial for the protection of our clients and their shareholders. In spite of the challenges posed by a partially or fully remote workforce and diminished physical facilities and resources, a lapse in standards cannot be justified.
At the same time, we are aware that some individual investors may face challenges obtaining a Medallion with reduced staffing at many banks and brokerages where they have relationships. As such, if a shareholder contacts an agent and states they are having difficulties:
STA recommends that the agent go back to credit-worthy issuers on small dollar items and to get an indemnity to waive the Medallion requirement for individual investors with small transactions. Whether to accept a waiver of the Medallion is still at the sole discretion of the principals (the issuers).
“Small” should be defined by the individual agent and its issuer clients. STA does not qualify dollar guidelines for small transactions given subjectivity regarding the agent’s size, the issuer’s creditworthiness, and the number of shares involved.
Individual investors may also seek a Medallion through digital means providing securely encrypted technology for establishing identity and submitting required documents electronically, such as via STA Member eSignature Guarantee: https://esignatureguarantee.com/
STA will continue to monitor status and communicate with its members as additional clarity unfolds.