We recently had the opportunity to chat with Seth Farbman, Chairman and Co-Founder of VStock Transfer, SEC-registered stock transfer firm serving private companies, IPO’s and issuers listed on NYSE American, NASDAQ and OTC Markets.
VStock Transfer is owned and managed by attorneys and a team of professionals who have spent their careers in counselling innovative companies on all aspects of initial public offerings, follow-on public offerings, private placements, proxy solicitations, reverse mergers and stock transfers.
Read on to find out why Seth believes transfer agents are important to both public and private companies, how VStock Transfer stands out from the pack, and why he believes in sharing his Rolodex.
MWM: Tell us a little about yourself and how VStock Transfer came to be.
SF: So I used to be a securities attorney. Don’t hold that against me. I would help companies raise capital and go public. I then started a firm called Vintage Filings out of my basement, which was basically doing FEC filings for publicly traded companies. We started that company in 2002 and by 2005 we had a couple thousand clients. And about 100 employees. We ended up selling that business to PR Newswire.
After that, I had the bug. I thought, okay, that was fun. Can we do that again?
Ultimately, I just really like the corporate services market. I like the public market. I like working with shareholders. About nine years ago, we started Vstock Transfer. We currently work with about 700 public companies. And while it may sound exciting – On LinkedIn, we look like we’re having a lot of fun – ringing the NASDAQ bell at the New York Stock Exchange – at the end of the day, we’re just gatekeepers for companies and their shareholder records. And that’s sort of what a transfer agent does.
We wear two hats: One is where we serve at the pleasure of the company and we help with what they tell us they need. But at the same time, we also serve all of their shareholders. So any time any retail shareholders want to know about depositing their stock or how they can gift stock to their kids – they need to call a transfer agent. And that’s what our staff does every day, all day – Speak to shareholders and see how we can help them with their share certificate news. And that’s very high-level work.
MWM: Why would a transfer agent be necessary to public and private companies?
SF: Great question! Well, the easiest answer is, transfer agents are necessary to meet certain regulations. A publicly-traded company – they’ve got to either be their own or have a registered transfer agent with the FCC.
For a private company, normally if they’ve got a handful of shareholders, they keep that data on an Excel sheet and they can live happily ever after. When would they bring on a transfer agent at the private level? Really for two reasons:
Number one is, if they are about to raise money and they want to present to these prospective investors or institutional investors that they are real and they intend to conduct themselves in a compliant manner, they’ll use a transfer agent. They really want to demonstrate that they are acting as if they are about to go public.
And the other is really based administration-based. I a company has 100, 200, 500 shareholders – We actually have one client that has twenty-two thousand shareholders – it just gets to be an administrative nightmare. So for the inexpensive rate, I’d rather just outsource it to a transfer agent that actually has a platform to manage all this. That’s when a private company will say, “We’ve got to bring on a transfer agent.”
MWM: What makes Vstock Transfer stand out among its competitors?
SF: On paper, it’s pretty simple: Customer service, responsiveness, and the fact that we’re more cost-effective. We try to stay within our lane of the companies that we try to service, meaning that our sweet spot is really servicing small-cap companies, especially in the IPO market. So we’re not going to pretend to go after the Fortune 100. Sometimes, these small companies may not necessarily know that they need a transfer agent. So, what we really try to focus on is how can we be there? How can we add value?
It’s not just about the customer service and the knowledge and experience, but we also try to be proactive with the services that we bring to the table. For example, we saw that a lot of our clients were having trouble getting something called the medallion stamp. So, we built something called esignature.com that allows us to get medallion stamps online. We’re always trying to be proactive.
I’m also a very big believer in trying to share my Rolodex because so many companies and shareholders are asking for general guidance, like a retail shareholder. They’ll say, I’ve got these shares, I need to deposit it. Do you have any suggestions where I can open up a brokerage account? I spend a lot of time trying to introduce people. I’m hoping the karma comes back. But I would say that’s a big way that we distinguish ourselves from some of the other transfers.