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ARTICLE XIII

FUNDS OF THE ASSOCIATION

Section 1. Funds of the Association shall be deposited to the account of the Association in a depositary or depositaries to be designated by the Board of Directors, and shall be drawn upon by check signed by the Treasurer and the President, or by the Treasurer and a Vice President, or by the Assistant Treasurer and the President.

Section 2. From time to time, funds of the Association may be invested, in the discretion of the Board of Directors or of the Finance Committee, wholly or in part in governmental or municipal issues or issues of instrumentalities thereof, or in certificates of deposit, savings certificates or savings accounts in substantial financial institutions.

ARTICLE XIV

EXECUTION OF INSTRUMENTS

Section 1. The Board of Directors may authorize any officer or officers to enter into any contract or execute and deliver any instrument in the name of the Association, and such authority may be general or confined to specific instances, but, unless so authorized, no officer shall have the power or right to bind the Association by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or in any amount.

ARTICLE XV

TERMINATION OF MEMBERSHIP

Section 1. Termination of membership for any cause whatsoever shall operate as a release and termination of all right, title or interest in the property and assets of the Association.

Section 2. Any Member or alternate Member may withdraw from, and terminate his membership in, the Association by his signifying his intention in writing to the Secretary of the Association.

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Section 3. The membership of a Member or of an alternate Member shall terminate if and when he ceases to be an employee of the corporation, association, copartnership or individual by whom he was designated. shall also terminate if and when the corporation, association, co-partnership or individual by whom he was designated, withdraws such designation.

Section 4. The Board of Directors shall have authority to expel any Member or alternate Member of the Association by a two-thirds vote of the entire Board for any conduct which, in the opinion of the Board, is improper or prejudicial to the reputation of the Association or detrimental to the purposes of the Association. No Member or alternate Member, however, shall be expelled until the expiration of twenty days after written notice shall have been mailed to him at his last known address specifying the charges preferred against him and designating a time when, and a place where, he may meet with the Board of Directors and submit his case. It shall be entirely within the discretion of the Board to determine the procedure at any such meeting and the time allowed within which the Member or alternate Member under consideration shall submit his case.

ARTICLE XVI

AMENDMENTS

Section 1. These by-laws may be repealed, altered or amended by a majority vote of those present at any meeting of the Members or of the Board of Directors, of which meeting notice stating the proposed changes shall have been given to the Members or the Directors, as the case may be, at least ten days previous thereto. If any by-law regulating an impending election of Directors is repealed, altered or amended by the Board of Directors, there shall be set forth in the notice of the next meeting of the Members of the Association for the election of Directors the by-law so repealed, altered or amended, together with a concise statement of the changes made.

Section 2. These by-laws cannot be altered or amended so as to clothe the Association or any of its officers or agents with power to create liability on the part of the Members other than for the payment of dues, or to permit the establishment and publication of policies, standards, practices, rules and regulations which shall be binding on the Members, or to change the purposes of the Association so as to embrace any matter or thing having no reasonable relation to the transfer of registered securities or allied functions.

ARTICLE XVII

SUCCESSOR TO THE STOCK TRANSFER ASSOCIATION,
AN UNINCORPORATED ASSOCIATION

Section 1. This Association was incorporated under Section 402 of the Not For Profit Corporation Law to

continue to carry on the activities of the Stock Transfer Association, an unincorporated Association.

Section 2. The property, business and affairs of such unincorporated Association were managed and controlled by an Executive Committee of fifteen members. The officers of such Association were a Chairman of the Executive Committee, a Vice Chairman, a Secretary, a Treasurer and an Assistant Secretary-Assistant Treasurer. Notwithstanding anything to the contrary in these by-laws, the Executive Committee in office at the time of the incorporation of this Association shall continue in office as Directors of this Association until January 1, 1972. The officers of such unincorporated Association at the time of the incorporation of this Association shall continue in office as officers of this Association until the terms for which they were elected shall expire. The Chairman of such Executive Committee shall assume the title of President of this Association and the Vice Chairman of such Executive Committee shall assume the title of Vice President of this Association. Any committees of such unincorporated Association at the time of the incorporation of this Association shall continue as committees of this Association to serve at the pleasure of the Board of Directors of this Association.

Senator WILLIAMS. Before getting into our discussion, let's have Mr. Van Dam's statement.

STATEMENT OF HENRY VAN DAM, PRESIDENT, CORPORATE TRANSFER AGENTS ASSOCIATION, INC.; ACCOMPANIED BY EDWARD J. BROWN, VICE PRESIDENT AND TREASURER

Mr. VAN DAM. Mr. Chairman, my name is Henry Van Dam. I am president of the Corporate Transfer Agents Association, Inc.

With me today is Edward J. Brown, vice president and treasurer of the Corporate Transfer Agents Association, Inc.

The Corporate Transfer Agents Association, Inc., is pleased to have been invited to appear before this committee and to express its views on the three proposed acts, S. 2551, S. 3297, and S. 3412.

I would like to take a few moments of your time to tell you about the Corporate Transfer Agents Association, Inc., and its goals. The association was founded in 1946 by several transfer agents or transfer officers of issuer corporations which handled their own transfer operations and did not use an outside agency for that purpose. The association is now a corporation organized under the not-for-profit corporation law of the State of New York. It has 83 member corporations throughout the United States. The participants are representatives of corporations which transfer their own stock and of other corporations which handle at least part of their own shareholder functions, such as payment of dividends or maintenance of shareholder records while employing an outside agent to transfer their stock.

Our members have a direct interest in each of their shareholders since these same shareholders are the owners of the company. The corporations take pride in responding to shareholder questions and transfer requests.

The association is managed by a board of 15 directors elected by the membership which include the president, vice president, secretary, and treasurer.

At its monthly meetings, the members of the association review and discuss common problems, procedures, State and Federal regulations, stock exchange requirements, and other matters in the securities field, and have guest speakers discuss related matters in detail.

A monthly newsletter of matters discussed and of interest is sent to all the members. Thus, the goal of the association to disseminate information and progressive thought among its members in the interest of betterment of the transfer industry and stockholder records is fully realized.

Now, with respect to S. 2551, the Roth bill, which proposed act would (1) establish and operate a national securities depository system; (2) establish a national securities transfer system; (3) implement recommendations of the National Commission on Uniform Securities Laws, which incidentally does not include any representatives of issuer companies in its proposed makeup; (4) adopt and utilize the benefits of modern technology in providing securities transfer service; and (5) promote competition and growth, the board of directors of the Corporate Transfer Agents Association, Inc., is opposed to its adoption by Congress on the grounds that its purposes are too broad and in many instances, vague.

Since this act proposes the addition of new corporation, the National Securities Corp., a corporation for profit, to be in competition

with presently operating systems, the problems of protecting investors would still exist since regulation of "other security transfer systems" is not a part of the proposed act.

The board of directors of the Corporate Transfer Agents Association, Inc., does not oppose the adoption of S. 3297, the Williams bill. We feel that the approach taken in S. 3297 whereby, among other things, the Securities Exchange Act of 1934 will be amended to include the term "clearing agency," appears to be written in such a manner as to hit at the very core of the "paperwork crunch" problem of 1968-70.

By having a well regulated depository, clearing and settlement system, stock certificates will be immobilized to a great extent and dividend claims will be greatly reduced. This in itself will allow the securities industry to be very flexible when confronted with high volume periods.

Also, the other proposed features in S. 3297; that is, (1) take steps to bring about the elimination of the negotiable stock certificate as a means of settlement among brokers and/or dealers; (2) study and investigate the practice of registration of securities other than in the name of the beneficial owner; and (3) provide for proper tax handling when registering securities in clearing agency name or any nominee or custodian thereof, all appear to be items that could greatly assist the securities industry in a beneficial way.

In other words, our association feels that these proposed features would be helpful to the financial community at large.

The board of directors of the Corporate Transfer Agents Association, Inc., is opposed to the adoption by Congress of S. 3412 on the grounds that the regulation of transfer agents, as described in the proposed act, is unnecessary and that the multiagency administration proposed under section 10 of the act can only lead to confusion.

We say this because we do not feel that the stated reasons for including corporate transfer agents in S. 3412 are valid.

We certainly agree that there was a paperwork crunch during the 1968-70 period; however, the primary cause of this crunch was directly related to the time when the brokerage community was experiencing a period of record fails.

As a result, certificates to be transferred into the names of stockholders were not delivered to the transfer agents until many weeks after the actual settlement date of the trades.

Also, completed transfers were available in many instances for 30 days before they were picked up by the presenter. The trouble, therefore, was mainly that of the broker-dealer for which the corporate transfer agents apparently are being faulted.

We feel that generally the members of our association who transfer their own stock were doing so within a 24-to-72-hour period during the paperwork crunch period of 1968-70. Today, although we are committed to a 48-hour transfer period, some of our members effect transfers within a 24-hour period.

Chairman Casey's memorandum did mention that responsibility for the back-office problems must also be shared by the broker-dealers, and the proposed act gives the Commission broad authority over the back-office area of broker-dealers.

It is interesting to note that although broad authority is mentioned over the back-office areas of broker-dealers, the proposed act imposes no penalties and provides for no disciplinary action against the brokerage house, which violates section 7 of the proposed act; but, under

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