SEC Charges Transfer Agent with Violating Multiple Rules

ADMINISTRATIVE PROCEEDING
File No. 3-19936

August 27, 2020 - The Securities and Exchange Commission today announced settled charges against VStock Transfer LLC, a registered transfer agent, for failing to comply with rules and regulations that govern the conduct of transfer agents.

According to the SEC's order, in December 2017, VStock failed to turn around within three business days at least 90% of all routine items received for transfer, and failed to timely provide the Commission with a written notice of the failure. The order further finds that, from July through October 2018, while serving as the escrow agent for the exercise of warrants, VStock failed to ensure that the securities were held in safekeeping and were handled in a manner reasonably free from risk of theft, loss, or destruction, and that funds were protected against misuse. Finally, the order finds that VStock failed to keep an accurate control book and master securityholder files for two issuers, and failed to accurately record the dates it received and/or turned around routine items in December 2017 and October 2018.

The SEC's order finds that VStock willfully violated the turnaround, safeguarding, and record-keeping provisions of Section 17A(d) of the Securities Exchange Act of 1934 and Rules 17Ad-2(a), 17Ad-2(c), 17Ad-6, 17Ad-10, and 17Ad-12(a) thereunder. Without admitting or denying the findings in the SEC's order, VStock consented to the entry of a cease-and-desist order, a censure, and a civil penalty of $65,000. VStock also consented to an order requiring it to comply with its undertaking to retain a compliance consultant.

The SEC's investigation was conducted by Hane L. Kim and Michael Paley of the Enforcement Division's Microcap Fraud Task Force, and supervised by Associate Regional Director Lara S. Mehraban. The SEC examination that led to the investigation was conducted by Carol Fava, Kenneth A. Liebl, and Steven C. Vitulano.