Post by
radarrookie on Jul 21, 2010 7:22pm
G8 CAN'T USE NOBO LIST TO VOTE
The NOBO/OBO System
The names of the ultimate beneficial owners of street name
shares - i.e., the customers of the brokers and banks who have
deposited the shares with DTC - are maintained by the brokers
and banks, not by companies themselves. Recognizing that this
system left companies without direct contact with a large
proportion of their beneficial owners, the Commission adopted
rules in 1983, which went into effect in 1986, requiring
brokers and banks to provide companies with lists of "non
objecting beneficial owners" (or "NOBOs") who did not object to
having their names and addresses supplied to companies (some may object).17
Objecting beneficial owners (or "OBOs"), which constitute an
estimated 75 percent of shares held in street name,18 still may
be contacted directly only by the broker or bank, or its agent.
Although companies may mail proxy materials directly to NOBOs,
as a practical matter they never do so, because current SEC
rules require companies to forward proxy materials through
brokers and banks regardless of whether they are also mailed
directly.19 Therefore, companies only use NOBO lists to mail
out supplemental materials, annual reports and quarterly
reports, which do not have to be mailed through brokers and
banks.20 Furthermore, because only the brokers and banks are
legally entitled to vote shares held in street name, companies
cannot use NOBO lists to enable beneficial owners to vote
directly with the company.
The Role of ADP
The overwhelming majority of brokers and banks have contracted
out the administrative processes of distributing proxy
materials, tabulating votes, and responding to requests for
NOBO lists, to the Investor Communications Services Division of
Automatic Data Processing, Inc. ("ADP").21 Brokers and banks
accomplish this by transferring the proxy authority they
receive from DTC (via omnibus proxy) to ADP via powers of
attorney.22 ADP then mails the proxy statements and voting
instruction forms (known as "VIFs") to beneficial owners. It
does not mail "proxies" to beneficial owners; instead, it
requests voting instructions from beneficial owners via the
VIFs, and thereby retains the legal right to vote the shares.23
ADP, as the agent of the brokers and banks, also has the
responsibility of creating NOBO lists upon request by
companies.24 As discussed below, companies must reimburse ADP
for its dissemination of proxy materials and other
communications, and creation of NOBO lists according to a fee
structure established by the NYSE and approved by the SEC.25
NOBO Has now become part of an overall fight back tactic.
Companies are now calling for their nobo/obo and doing name
changes, cert recalls to force the MMs from destroying their
companies!