Shareholder Rights

ShareSoc continue to press for the name on the register, i.e. the beneficial owner not just the nominee as part of a package to restore the rights of individual shareholders, who have been disenfranchised by the nominee system and consequently disempowered. See our Shareholder Rights Campaign for more, and to support us on this. Below is some commentary on recent and not so recent relevant developments.

You may have seen that Citi have “launched” a new shareholder voting system. It’s a test bed system being prototyped with some input from Computershare and as such it’s a proof of concept.

What the journalist didn’t do was check the market and just swallowed a press release without any further research. https://www.ft.com/content/31140600-c619-11e7-a1d2-6786f39ef675

Of course, efforts to reform the broken voting system are welcome. But Citi’s move isn’t actually a first or even particularly revolutionary. Both CREST and Manifest have been offering electronic voting systems for quite some time. For example the Manifest voting system t revolutionised voting for shareholders without any delays, no paper and has done for 21 years. OK, so for first 5 years of those 21 years, Manifest had to send paper ballots to the registrars by courier but after that they all went electronically. And CREST is electronic too.

After Manifest came E-Vote – who with the vocal support of the ABI and NAPF was also going to “revolutionise voting”. And in the US there have been attempts to introduce alternatives to the bank-bound bureaucracy, but like E-Vote (which closed without having lodged a single vote), SwingVote was subsumed into InveShare which was last year bought by the US monopoly, Broadridge. So much for competition being good for consumers.

The custodian banks have a vested interest in not ceding control of pooled nominee accounts which are key to their profitability.

In my opinion, all the registrars, not just Computershare want/need to shakeup Broadridge andall the custodians probably resent their fees to Broadridge and who can blame them.

Custody bank assets under administration:

BNY Mellon – $30.5 trillion
State Street – $28.7 trillion
JP Morgan – $20.5 trillion
Citi – $15.1 trillion

https://www.globalcustodian.com/Custody/Inside-the-biggest-custody-deal-of-all-time/

The US system is bonkers and bureaucratic https://www.bloomberg.com/view/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares no wonder the SEC keeps trying (and failing) to reform it!

Now imagine how more complicated it gets if you are an asset manager with multiple asset owner clients, each with their own custodian and each custodian operates its own communications back to multiple stock registrars. There are multiple registrars with multiple database – do you want to interface with multiple platforms? Nope. Swipe right, swipe left, not log in here, log in there.

Broadridge makes it easy for the US banks and for years has been doing all the boring mailings (yes, vast warehouses of printers and envelope stuffing). There are thousands of retail shareholders, but not so many institutions. Custodians don’t want the bother of the retail shareholders, so it gets outsourced. But that service is hopeless for institutions.

Complex problems, money and politics = toxic. Georgeson (part of Computershare) has just settled a very large fine with the SEC for bribing an ISS voting operations executive to find out what was happening with votes: http://www.nasdaq.com/article/computershares-georgeson-unit-resolves-us-fraud-probe-for-45-mln-20171130-01019 That’s not a sign of a healthy system.

This complexity is why most people lose the will to live in respect of voting reform. Too complicated for any one individual. It needs the regulators to step in. Which (good news in the USA) the SEC will do next year.

https://www.bna.com/sec-shorter-rulemaking-n73014471860/ Meanwhile back in the UK, the home of shareholder democracy, things have ground to a halt. Despite the UK environment being more conducive to shareholder voting, the UK Government is bogged down with Brexit and, oddly enough, the Shareholder Rights Directive which is supposed to make voting easier has just kicked debate into the long grass. Not good enough.

Be careful what you wish for. Broadridge will aim to have vote forms automatically filled in with votes for management which go through sooooo easily, without a second thought. Broadridge is also the one touting the virtual AGMs – stops difficult people turning up. https://www.ft.com/content/cce89ddc-b4eb-11e7-a398-73d59db9e399

Manifest have fought hard, and won some skirmishes- the SRD doesn’t exactly mirror the US system, it could have been much worse, but it gives custodians a head start. Rubbish was put out by some when proxy plumbing was first discussed here: https://www.google.co.uk/search?q=proxy+plumbing+concept+release&oq=proxy+p&aqs=chrome.0.69i59j69i60l2j69i57j69i60j0.1934j0j4&sourceid=chrome&ie=UTF-8 (note the authors of article #4)

Millions of dollars are spent on lobbying https://www.centerforcapitalmarkets.com/?s=proxy to keep shareholder accountability at bay.

If there’s anything that ShareSoc has learned in recent years -it’s “beware greeks bearing gifts” – banking technocrats don’t necessarily have your personal interests at heart. ShareSoc will be putting itself into the heart of the reform to ensure that your private property is fully restored and that we have a voting system which really does make capitalism fit for all.

Do you want your votes back? Get in touch today! Please add your comments to our blog.

This does not bode well for individual investors. ShareSoc will continue to lobby on their behalf.

Summary

Ordinary savers and citizens are the providers of capital to business, not banks or asset managers
Retail shareholders have been progressively disenfranchised by banks and brokers
Over the past 20 years it has become ever harder for retail shareholders to vote their shares. The changes introduced by CREST to improve trading efficiency came at a cost – we lost our voice. If we don’t like what we find, it’s now largely exit (sell) or lump it.
ShareSoc continues to lobby for the restoration of your proper rights. If Mrs May is serious about “capitalism for all”, then things need to change.

Cliff Weight, the author of this blog, is a Director of ShareSoc. He is also a NED of Manifest.

Post Date: December 11, 2017

One comment

Stephen Burke says:

11th December 2017 at 11:40 am

It isn’t just about voting. I have a problem with shares held by Barclays (currently in a huge mess of course). Barclays say the fault is with the registrars so they won’t do anything, the registrars say I’m not a shareholder so they won’t talk to me.

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Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	There will be an initial Zoom meeting on Monday 29th April at 7pm to launch this group, please email info@sharesoc.org if you are interested in joining.

Group description:	A new in person group coming soon! Keep and eye on our Events page to register for the launch meeting.
Meeting Type/Venue:	In person
Meeting Frequency/Timing:	TBC

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	This group was set up as a forum to discuss companies in detail, each company is introduced by a member and discussion may last one or two hours. Membership is by invitation only and is for experienced investors.
Meeting Type/Venue:	The group meets at a venue in Waterloo, London.
Meeting Frequency/Timing:	Meetings are on Tuesday mornings at two month intervals.

Group description:	Our group members have wide ranging investment experience and work backgrounds. Discussion topics include reviewing our recent stock or collective investment buying and selling activity, plus what we are considering buying or selling and the reasons for our decisions. We also have a wider discussion on where we think opportunities might arise in the next few months and what we think needs to be avoided. Members occasionally lead discussions on specific topics such as recent events attended, articles or books of interest and sources of investment ideas and information.
Meeting Type/Venue:	During the pandemic our meetings were held on Zoom, but we have now resumed meeting in person at a location a few miles to the west of Colchester. Most meetings will now be in person, but it is possible that occasional meetings will be held on Zoom in special circumstances.
Meeting Frequency/Timing:	We meet midweek every two months. Zoom meetings run for about two hours from 10.30am and in person meetings from 11am until about 3pm, including a break for lunch.

Group description:	Our group is a broad church that contains investors of varying age and experience. We discuss stocks and investment trusts that we have bought, sold or are interested in and the reasons behind our decisions, and try to make sense of the ever changing investment environment. Our members backgrounds are diverse and include corporate banking, engineering, teaching and the leisure industry. Discussions are robust and challenging but tend to be to be informal, and do not generally involve agendas, presentations or detailed preparation. We are a friendly and approachable group who welcome investors of all levels – we just ask that you contribute, at whatever level you can.
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Meeting Frequency/Timing:	We meet every 2 months, usually on a Wednesday morning at 11am.

Group description:	Group focused on active investing, primarily in small / medium cap UK equities.
Meeting Type/Venue:	Regular Zoom meetings interspersed with occasional face to face meetings and social activities in the North West.
Meeting Frequency/Timing:	Monthly on Saturdays at 10am.

Group description:	Our group covers a wide spectrum of mainly stock market investing and trading from equities – which include shares, ETF’s Investment and Unit Trusts. We normally rotate the meeting chairperson (responsible for creating, with member’s help, suitable agendas) and a meeting presenter (members take it in turns to provide a 15 to 45 minute presentation on a subject of their choice). Various investing topics of interest are regularly discussed such as software, brokers, investing categories and markets and any related topics of interest.
Meeting Type/Venue:	Meetings will be returning to in-person in a private room at a West London golf club, close to an underground station. In the meantime monthly video calls and an in-between meeting email group will continue.
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Shareholder Rights

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