How Corporate America Ceded its Shareholders to Intermediaries

For those interested in the history of the Street Name System and its detrimental effects on issuer-investor communications, the best written piece is by David Donald in The Rise and Effects of the Indirect Holding System. The article, written just before the 2008 crisis, is dense and thorough. But for those who want to get to Professor Donald’s bottom line:

…the choice of the indirect holding system for securities settlement forced U.S. issuers to cede their shareholder data to intermediaries.

and

The effect [of the Street Name System] on securities settlement was somewhat comparable to the effects of a law that would require all computers plugged into the internet to run on DOS. (pps 1 and 18)“

In its own, slower way, the Indirect Holding System is an infrastructure issue every bit as fundamental to fairness as High Frequency Trading. Well worth a read for those who care about the details.