136. Transfer Of Stocks And Registry Of Bonds For Customers

A New York bank or trust company with a large number of bank correspondents cannot avoid the responsibility of transferring stocks and registering bonds for its customers and the customers of its correspondents. The bulk of the stock and bond sales of the country is made in New York and in consequence the majority of the large railroad and industrial corporations have transfer offices there. In fact, corporations whose shares are dealt in, on the New York Stock Exchange, are required under its rules to have a transfer office in the Borough of Manhattan.

There is a great responsibility in making these transfers for customers, because the transfer agents require that an endorsement of stock be known to them or that the endorsement be guaranteed by someone known to them. It usually falls to the lot of the New York bank to guarantee the endorsement of the customer of their correspondent, whose signature they do not know. If the transfer appears in the least unusual, the New York bank should require definite instructions from its correspondent to guarantee. Certificates sent for transfer or sale should never be assigned to the bank, because it will be necessary for the directors of the bank to pass a formal resolution authorizing some officer to assign the certificate. A certified copy of the resolution duly attested and sealed must be filed with the transfer agent, together with a separate assignment, duly executed. If the correspondent bank wishes to save express charges on a certificate assigned in blank, it may forward the certificate by registered mail without assignment, and in another mail, a separate irrevocable stock power as shown in Figure 112 on page 231 duly dated, signed and witnessed.

Irrevocable Stock Power

Know All Men By These Presents,

That................................................................................................................................

For Value Received have bargained, sold, assigned, and transferred, and by these presents do bargain, sell, assign, and transfer unto............................

Shares of the........................................Stock of the................................................

standing in............................name on the books of the said....................................

represented by Certificate No................................................................herewith

And................do hereby constitute and appoint....................................................

........................true and lawful Attorney, Irrevocably, for................and in

................name and stead but to...............use, to sell, assign, transfer, and make over all or any part of the said stock, and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that................................said Attorney or............................substitute or substitutes shall lawfully do by virtue hereof.

In Witness Whereof,........................have hereunto set........................

hand and seal at........................................the........................................................

day of............................................................................19

Signed, Sealed, and Delivered in the presence of

[L.S.]

Figure 112. Irrevocable Stock Power.

A few words of caution regarding the filling in of a stock power may be appropriate. The power shown in Figure 112 on page 231 corresponds to the form printed on the back of stock certificates. The portion in brackets, referring to the person who represents the stockholder at the transfer office and the place for the name marked x x x should be left blank. The other spaces should be filled in.

Bonds may be registered as to principal only and as to principal and interest. When a bond is registered as to principal only the name of the owner is inserted in a space reserved on the back of the bond, and signed by an officer of the company. The bond can not then be delivered until released to bearer or the party who buys it. The coupons are left attached to the bond and are paid in the usual way when due.

When bonds are registered as to principal and interest it is customary to issue a new certificate after cancelling the old one and all the attached coupons. Assignments must then be made on an irrevocable bond power, similar to the stock power.

Negotiable securities should always be shipped by express at full valuation.