17 CFR § 240.17Ad-11 - Reports regarding aged record differences, buy-ins and failure to post certificate detail to master securityholder and subsidiary files.
(a) Definitions.
(1) Issuer capitalization means the market value of the issuer's authorized and outstanding equity securities or, with respect to a municipal securities issuer, the market value of all debt issues for which the transfer agent performs recordkeeping functions on behalf of that issuer, determined by reference to the control book and current market prices.
(2) An aged record difference is a record difference that has existed for more than thirty calendar days.
(b) Reports to Issuers.
(1) Within ten business days following the end of each month, every recordkeeping transfer agent shall report the information specified in paragraph (d)(1) of this section to the persons specified in paragraph (b)(3) of this section, when the aggregate market value of aged record differences in all equity securities issues or debt securities issues maintained on behalf of a particular issuer exceeds the thresholds set forth in the table below.
| Issuer capitalization | Aggregate market value of aged record differences exceeds | |
|---|---|---|
| For equity securities | For debt securities | |
| (1) $5 million or less | $50,000 | $100,000 |
| (2) Greater than $5 million but less than $50 million | 250,000 | 500,000 |
| (3) Greater than $50 million but less than $150 million | 500,000 | 1,000,000 |
| (4) Greater than $150 million | 1,000,000 | 2,000,000 |
(2) Within ten business days following the end of each month (or within ten days thereafter in the case of a named transfer agent that receives a report from a service company pursuant to paragraph (b)(3)(i)(C)), every recordkeeping transfer agent shall report the information specified in paragraph (d)(2) of this section to the persons specified in paragraph (b)(3) of this section, with respect to each issue of securities for which it acts as recordkeeping transfer agent, concerning any securities bought-in pursuant to § 240.17Ad–10(g) or reported as bought-in pursuant to § 240.17Ad–10(c) during the preceding month.
(3) The report shall be sent:
(i) By every recordkeeping transfer agent (other than a recordkeeping transfer agent that performs transfer agent functions solely for its own securities):
(A) To the official performing corporate secretary functions for the issuer of the securities for which the aged record difference exists or for which the buy-in occurred;
(B) With respect to an issue of municipal securities, to the chief financial officer of the issuer of the securities for which the aged record difference exists or for which the buy-in occurred; or
(C) If it acts as a service company, to the named transfer agent; and
(ii) By every named transfer agent that is engaged by an issuer to maintain and update the master securityholder file:
(A) To the official performing corporate secretary functions for the issuer of the securities for which the aged record difference exists or for which the buy-in occurred; or
(B) With respect to an issue of municipal securities, to the chief financial officer of the issuer of the securities for which the aged record difference exists or for which the buy-in occurred.
(c) Reports to appropriate regulatory agencies (1) Within ten business days following the end of each calendar quarter, every recordkeeping transfer agent shall report the information specified in paragraph (d)(1) of this section to its appropriate regulatory agency in accordance with § 240.17Ad–2(h), when the aggregate market value of aged record differences for all issues for which it performs recordkeeping functions exceeds the thresholds specified below:
(i) $300,000 if it is a recordkeeping transfer agent for 5 or fewer issues;
(ii) $500,000 for 6–24 issues;
(iii) $800,000 for 25–49 issues;
(iv) $1 million for 50–74 issues;
(v) $1.2 million for 75–99 issues;
(vi) $1.4 million for 100–499 issues;
(vii) $1.6 million for 500–999 issues;
(viii) $2.6 million for 1,000–1,999 issues; and
(ix) An additional $1 million for each additional 1,000 issues.
(2) Within ten business days following the end of each calendar quarter, every recordkeeping transfer agent shall report the information specified in paragraph (d)(2) of this section to its appropriate regulatory agency in accordance with § 240.17Ad–2(h), concerning buy-ins of all issues for which it acts as recordkeeping transfer agent, when the aggregate market value of all buy-ins executed pursuant to § 240.17Ad–10(g) during that calendar quarter exceeds $100,000.
(3) When the recordkeeping transfer agent has any debits or credits for securities transferred, purchased, redeemed or issued that are unposted to the master securityholder and/or subsidiary files for more than five business days after debits and credits are required to be posted to the master securityholder file or subsidiary files pursuant to § 240.17Ad–10, it shall immediately report such fact to its appropriate regulatory agency in accordance with § 240.17Ad–2(h) and shall state in that report what steps have been, and are being, taken to correct the situation.
(d) Content of reports.
(1) Each report pursuant to paragraphs (b)(1) and (c)(1) of this section shall set forth with respect to each issue of securities:
(i) The principal dollar amount and related market value of debt securities or the number of shares and related market value of equity securities comprising the aged record difference (including information concerning aged record differences existing as of the effective date of this section);
(ii) The reasons for the aged record difference; and
(iii) The steps being taken or to be taken to resolve the aged record difference.
(2) Each report pursuant to paragraphs (b)(2) and (c)(2) of this section shall set forth with respect to each issue of securities:
(i) The principal dollar amount of debt securities and related market value or the number of shares and related market value of equity securities comprising any buy-in executed pursuant to § 240.17Ad–10(g);
(ii) The party that executed the buy-in; and
(iii) The reason for the buy-in.
(e) For purposes of this section, the market value of an issue shall be determined as of the last business day on which market value information is available during the reporting period.
(f) A copy of any report required under this section shall be retained by the reporting transfer agent for a period of not less than three years, the first year in an easily accessible place.