Series 24: Forwarding Of Securities Information And Proxy Materials

Forwarding of Securities Information and Proxy Materials

To facilitate trading, the ownership of a security is usually designated in street name to the broker-dealer—this means that the securities are registered in the name of the broker-dealer, rather than the actual purchaser. The purchaser is known as the beneficial owner—one who has the benefits of owning a stock or fund.

A member firm that holds securities in street name is required to forward all information it receives from the issuer (such as annual reports and information statements) to the beneficial owner or the beneficial owner’s investment adviser.

Whenever an issuer delivers proxy materials to the member firm and promises to reimburse the firm for any out-of-pocket expenses, the member firm must promptly transmit those materials to the beneficial owner. The proxy statement provides information relevant to upcoming votes, such as:

• • The election of individuals to the board of directors
• • The election or ratification of the company’s accountant