DTCC Connection

Sep 01, 2010 • DTCC Connection

LENS Offers a Tool of Choice for Compliance

by Edward C. Kelleher


"Whenever we make a sales call, we're invariably asked if we use LENS. It has a hallowed status in the business – it's the established brand name."


Arthur Rosenzweig, president of Mediant Communications, was speaking about DTCC's Legal Notice System (LENS), which gives customers a comprehensive library of the latest informational notices concerning bankruptcies, defaults, class actions and reorganizations, as well as general notices to holders.


"For nearly eight years, LENS has been a key component in our delivery of Reorganization Communication notifications," said Edwin Crespo, director of Reorganization and Class Action Client Services, Broadridge.


Broadridge, Mediant and other leading communication firms use LENS to serve broker/dealers and banks by monitoring the notices posted to the system and offering mailing services when firms wish to pass the notices on to clients.


Key compliance tool

As the central depository for the U.S., The Depository Trust Company (DTC), a DTCC subsidiary, holds in custody an estimated 90% of all U.S. securities. This means it receives legal notices on all securities in custody from numerous sources, including issuers, agents and the courts, making it the most complete repository of corporate notices in the U.S.


"The economic situation has changed dramatically and there are so many more bankruptcies and defaults in recent months that these notices have become increasingly important to our clients and their investors."

-- Arthur Rosenzweig, president of Mediant Communications

Crespo described LENS as the compliance tool that helps its clients meet requirements on notifying security holders about bankruptcies and defaults.


"We have to have accurate and up-to-date information on these issues," Rosenzweig said. "We rely on LENS for this information, especially for bankruptcies and defaults notices."


Arthur Rosenzweig, president of Mediant Communications

"On average, we can go through more than 100 notices a day covering a range of actions on both corporate and municipal securities," said Crespo. "We give our clients reports on these notices and let them decide if we need to mail this information to their customers."


Easy online searching

DTC is required to make these notices available to its customers, and LENS has been available to customers online since 2000. The service allows firms to submit a list of CUSIPs and notice types they are interested in and receive daily email alerts when these notices are posted.


"Today, LENS also offers advanced search capabilities," said Patrick Kirby, DTCC managing director, Asset Services. "Customers can search for notices by CUSIP, a keyword such as an issuer name or a LENS document number, which may be cross-referenced in corporate action information DTC provides through its reorganization systems."


Reliable information

Both Crespo and Rosenzweig say their clients need legal notice information for both regulatory compliance and better customer service, but say that the emphasis today is on compliance.


Edwin Crespo, director of Reorganization and Class Action Client Services, Broadridge

"Compliance is the driving force behind LENS," says Crespo. "When we meet with customers, we always ask them to consider current rules on bankruptcy and default notification and whether they're comfortable with their compliance efforts. We tell them they have the option to use this additional service – LENS – and that there is no easier way to identify and communicate this news to their investors."


Mediant uses LENS mainly for bankruptcy and bondholder notices, Rosenzweig says, and LENS gives its clients a strong comfort level because "it's the best tool out there."


"For nearly eight years, LENS has been a key component in our delivery of Reorganization Communication notifications."

-- Edwin Crespo, director of Reorganization and Class Action Client Services, Broadridge


"The economic situation has changed dramatically and there are so many more bankruptcies and defaults in recent months that these notices have become increasingly important to our clients and their investors," Rosenzweig added.


Daily check-in

While both companies obtain some legal notices from other sources, both do a daily check of LENS documents to make sure they haven't missed any critical notices and, on more than one occasion, LENS has saved the day.


In one instance, Rosenzweig reported, a claims agent forgot to notify Mediant of a bankruptcy document regarding the opportunity for investors to vote on a particular issue. Mediant found the document in LENS and sent it on to the client the same day.


Crespo said that when trustees issue documents, LENS is the only means of finding the documents. "We're not registered holders so we would never receive notices distributed by a trustee." @


[For more information on LENS, contact Ginger Holton, LENS product manager, at vholton@dtcc.com or 212.855.5319.]



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