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SEC Proposes Electronic Filing of Transfer Agent Forms

The SEC has released a proposal to require the electronic filing of the forms used by transfer agents to register with the appropriate regulatory agency, to provide annual reports and to withdraw from registration (Rel. No. 34-54356, August 24, 2006). The proposed forms will be filed on EDGAR in XML format so that all of the data will be tagged for easy access and searchability.

There are currently 785 registered transfer agents, 519 of which are registered with the SEC. The remaining transfer agents are registered with other agencies such as the Comptroller of the Currency, the Federal Reserve System or the Federal Deposit Insurance Corp. The SEC receives over 1,000 transfer agent forms a year, including Forms TA-1, which is the uniform registration form, TA-2, the form for reporting activities, and Form TA-W which is used to withdraw from registration as a transfer agent. Only the transfer agents that are registered with the SEC file Forms TA-1 and TA-W. All transfer agents file Form TA-2 with the SEC, whether they are registered with the SEC or not.

The SEC uses the information on the forms to review and approve applications and to monitor transfer agents' operations and services. The staff currently enters certain basic information from the forms into EDGAR. In order to view all of the information on a transfer agent, the public must obtain a hard copy of the form. The SEC noted that it receives fewer Forms TA-2 than there are registered transfer agents. The reasons for the absence of required forms may be due to transfer agents that have gone out of business without filing withdrawal forms or some transfer agents may not be meeting their filing requirements.

In order to move to an electronic filing format, the SEC developed a new application in EDGAR that uses a commercial software package. The SEC noted that EDGARLite, as it is called, is the first application that would require filers to purchase and install a specific commercial software package chosen by the SEC. The commercial software is the most cost-efficient way for the relatively small number of forms to be filed on EDGAR in XML format, according to the SEC. The SEC concluded that it would not be economically feasible to develop an EDGAR application for transfer agents without using commercial software.

To prepare for the electronic filing environment, transfer agents must apply for access to EDGAR. The SEC advises transfer agents to review Regulation S-T which provides the instructions and technical requirements for submitting filings on EDGAR. There will not be any fees for the electronic filing of transfer agent forms. The specified software costs approximately $200. Transfer agents may apply for a hardship exemption from the electronic filing requirement and the SEC will determine whether the exemption is appropriate.

The SEC expects transfer agents to begin filing electronically prior to January 1, 2007 if the proposed amendments are adopted and become effective by that date. For the first year of electronic filing, current SEC-registered transfer agents would have to file an amended Form TA-1 before they could file a Form TA-2 in order to establish a complete and current record of registration in a centralized and searchable database. Transfer agents that are registered with other regulatory authorities would not be subject to this requirement. The comment period on the SEC's proposal will remain open for 45 days.