Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 2, 1994 TAG: 9412020048
SECTION: BUSINESS PAGE: A13 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
Federal regulators are pushing for a new system that Securities and Exchange Commission Chairman Arthur Levitt Jr. called ``a vast cultural change.''
At an open meeting Thursday, the SEC discussed a proposal to create a direct registration system for stock ownership that would allow all investors to keep shares in their name directly on the books of the company they're investing in. They would receive account statements instead of stock certificates.
That's what happens now with investors who participate in many stock purchase plans and mutual funds.
The SEC opened the proposal to public comment for 60 days, including the issue of whether the watchdog agency should play a more active role in developing the direct registration system.
When the new registration system is built, Levitt said, investors will be able to transfer electronically their stock holdings to a brokerage firm upon request, giving them the same ``mobility'' as if they held certificates.
``American investors have been used to doing business in a certain way,'' Levitt said, adding that some "people have been used to storing their certificates under their mattresses or in closets.''
But if you're worried that this spells the demise of the traditional pieces of parchment with the colored borders, rest assured: Stock certificates still will be around. The SEC proposal specifies that ``individual investors who desire to maintain record ownership in certificate form still will be able to do so.''
People have various reasons for wanting to keep certificates. Maybe it's your grandfather's old Mexican Railway bonds that became worthless after the company was nationalized following the Mexican Revolution.
Or maybe there's another reason.
After Playboy Enterprises Inc. went public in 1971, the company found it had about 14,000 single-share stockholders - about six times as many as most other companies its size.
Why? Many of them bought one share just to get the stock certificate, which was graced with the nude image of February 1971 Playmate Willy Rey. It was costing Playboy $100,000 a year to service the accounts of those single-shareholders.
So in May 1990 the company announced a recapitalization plan - and replaced the nude figure with a clothed one.
by CNB