SIE Ready📣 Corporate Actions · Lesson 4 of 4 · 5 min
Voting From Afar: Proxies and Street Name
🗳️ Most investors never set foot in a shareholder meeting, yet their votes count. The proxy is how.
💡 Key idea
Street name = registered to the firm, owned beneficially by the customer. The firm forwards proxy materials, at the issuer's expense, and votes per the customer's instructions.
🧠 Why it matters
A PROXY is a written authorization for someone else to vote your shares at a meeting. The PROXY STATEMENT describes the matters up for a vote (such as electing directors). The REGISTERED OWNER is the name on the issuer's books, kept by the TRANSFER AGENT. Most shares are held in STREET NAME: registered to the broker-dealer (through a depository) while the customer is the BENEFICIAL OWNER with the economic benefits. Because the issuer cannot see street-name holders, broker-dealers must forward proxy materials and annual reports to beneficial owners (Exchange Act Rule 14b-1 and FINRA Rule 2251), with the issuer reimbursing the cost, and collect voting instructions. Example: a customer owns shares in street name; the firm sends her the proxy and votes as she instructs.
📈 In the real world
📮 Rosa, a fictional customer, holds shares in street name and gets proxy material from her broker, not from the company. She asks why. Her rep explains the transfer agent's records show the firm's nominee, so the firm forwards the materials and passes along her voting instructions.
📌 Takeaways
- Proxy = written authority to vote shares on your behalf
- Street name: firm is registered owner; customer is beneficial owner
- Firms forward proxy materials; the issuer pays the reasonable cost
📖 Terms in this lesson
Proxy: A written authorization letting someone else cast a shareholder's votes at a meeting.
Street name: Registration of securities in the broker-dealer's name while the customer remains the beneficial owner.
✅ Test yourself
Shares held in street name are registered in whose name?
- The issuer's
- The customer's
- The broker-dealer's nominee
- The transfer agent's
Answer: C · The broker-dealer's nominee
In street name, shares are registered to the firm (through its nominee or a depository) while the customer is the beneficial owner. The transfer agent keeps records but is not the owner.
Who keeps the issuer's record of registered shareholders?
- FINRA
- The customer's bank
- The SEC
- The transfer agent
Answer: D · The transfer agent
The transfer agent maintains the issuer's list of registered owners and records transfers. The SEC and FINRA regulate but do not keep issuers' shareholder records.
Who generally pays the reasonable cost of forwarding proxy materials to street-name owners?
- The issuer
- The beneficial owner
- The broker-dealer
- FINRA
Answer: A · The issuer
Under FINRA Rule 2251 the issuer (or the soliciting party) reimburses the firm's reasonable costs at approved rates. Customers and FINRA do not pay, and firms are reimbursed.
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