As expected, the largest percentage of the responses, 78.7%, indicated that the person responding to the survey did not perceive nominee name or street registration to be an issue of concern.
It is intuitive that private, individually held banks with a small number of shares outstanding would have less reason to view nominee name share ownership as a major problem.
Street registration or nominee name registration represents at least two areas that should concern bank management.
Awareness should then lead to specific actions, the first of which would be to gather information regarding the registered owners of their own stock to identify any nominee name shareholders who would create potential difficulties for them.
The authors anticipate that this study will stimulate attention by the banking industry due to the potentially harmful practice known as nominee name or street registration of stock.
As participants in exchanges try to reduce transaction times for purchases and sales, time considerations alone may make it necessary to have brokers make your purchases using their nominee names (Goldsmith, 1994).
Nominee names make it difficult at best and often impossible to uncover true ownership (Waters & Donkin, 1990).
First, the study will illustrate the dilemma that is faced by banks as a result of securities issued in nominee names. Second, the study will show through a survey the level of awareness and concern of banks regarding street registration.
Surveys were sent to two hundred and fifty banks in Texas with total assets over seventy-five million to determine their knowledge and/or awareness of this dilemma of nominee names. Large, super-regional banks such as Chase, Bank of America and Wells Fargo were not included in this study.
One would expect that public companies would have more concern with securities being issued in nominee names. Since most of our respondents do not have the perception of street registration being a problem, the answer to this question is consistent with expectations.
Brokerage companies that, in many cases, own a significant number of shares of a company or bank actually can cause the company or bank to break the SEC rules regarding disclosure by holding their customers' shares in nominee names.
It is hoped that this study of nominee names, or street registration, will stimulate further study into this potentially harmful practice.