How should we handle data management for issuers that aren't a TAD3 agent client?

[JFWooten4]

Our beta client has asked us to change the content of their page after our termination of their service arrangement. I have drafted the following initial reply (emphasis added):

To your first point, I agree that the company did transition to its own internal ledger management. However, I am not sure that has a direct bearing on the archive notice.

This webpage for Laylor was and is primarily for your investors. Since we never sent them a notice of terminated service, this is the only way we as agent can let them know about the transition of recordkeeping when they check their account wallets. I am not sure if you notified them of the termination, but in any case I believe it's a reasonable notice, at least for the time being, so that investors know whom to contact about their shares (as further laid out towards the bottom).

Again, the page is not actively linked on the main site homepage, and it now directs search engines to ignore it. So I hope that eases your concerns, just to make sure existing company info stays properly and compliantly archived.

Thank you for the catch on the spelling correction! I've got that update in our systems, and it should go through our deployment pipeline by next week.

As for updating the content on Laylor's archived page, that is really only for existing/active clients. While I definitely appreciate your intent to keep things current for clarity, that will need to come from your own site if and until we enter into a new agreement.

This is a pretty hard line that I'm not super sure about. On one hand, we could let any issuer add their page to the site, which supports the contemplated open-source independent deployments of TAD3. On the other, this could get misconstrued as being a sign of endorsement, especially with the present Syndicate footnote logo.

I think to how Amazon books look basically the same, and there's just a little field for "publisher" where they disclose if it's through KDP. Like should something like that be more prominent, as I've done with the existing disclaimer?¹

Footnotes

1. Which they did not like ↩

[tehchives]

I think it's reasonable to maintain an ongoing record of issuers who might have used the service in the past - and I also think it's reasonable from both a issuer / client side and a user / investor side that those pages also continue to exist in some form. Trades and tokens exist on the blockchain and having something empirical and auditable is only a benefit.

It sounds like Laylor is continuing on acting as their own TA, and is continuing to use the tokens to track ownership. That's very cool! but, as you say correctly in your reply, it isn't BT's responsibility to maintain site resources after termination of contract. While you do also correctly leave open the idea that a separate services contract to maintain those web resources could be opened, I wonder if that might be an overextension of our resources and not really worth the time to do (if that's all the contract concerned).

I do like the idea of any issuer being able to be listed. It brings to mind for me extensions of the same idea that drives trying to bring all public stock data under a single accessible roof per the DRS database. The concern of endorsement is a valid one, and I don't think it's as simple as having DUNA votes for "endorsed" issuer pages as it would be pretty odd if the DUNA had the ability to veto clients in that way. BT needs to still have relative autonomy in those areas. A standard procedure would be needed.

I like your header message on the archived page (need of proofread aside) though rather than stating that we don't know their new TA plans, I think it would be cleaner to express the known date range(s) they were utilizing TAD3 protocol (through Syndicate BT). We can also express that due to that change in management the page is not actively being kept up with and any data therein is only expected to be accurate to the most recent date under contract (if a BT client). Similarly, if there is no date range where they were a given client, then it can be assumed that they never have been - and this should come with the understanding and framework that there's no endorsement of the company nor is there any claimed assurance that listed information on such a page is accurate and timely.

[JFWooten4]

To LRF's point, my immediate and largest concern is the investors who don't check in on the issuer for a while. That's a really reasonable position given this particular issue is of unknown market value. With something so speculative that could sit around waiting to grow for a decade or more while the company figures things out, well, the investor may just ignore it and leave it for retirement management.

That sort of patient capital is exactly what I think all of us and our counterpart constituents want in markets. Everyone seems to win when investment horizons increase, companies can focus on the big picture, and team members stay grounded enough in their vesting that they stabilize in long-term careers. That vision for a more prosperous future is also why I've had such a tough time letting this beta client go.

Background

As disclosed on the old blog, they didn't pay us in dollars. At first this was due to some technical glitches with poor banking systems. Later it was by my own choice to continue servicing after nonpayment.

I think that worked out really well just logistically, in having something to prove out the data to the Commission. But that wasn't the only reason I did it. Some of the early website commits¹ around TAD3 pricing specifically say that we'd like to offer services for free, as did I on LinkedIn in the early days.

Back at the start, my qualm was that we wouldn't have any funds to pay the DTC LP agent fees. I've come over that as I understood the position they held as a single name like all other registered investors. But now the government-mandated searches for lost investors (which I agree with and think serve the public well) just cost too much.

We have to continually locate the mailing addresses of inactive accounts, making sure property isn't "lost" to the states. That's a pretty manual process right now that took up not insignificant bandwidth through my manual efforts over the years with just this one client. I just don't presently see how to offer a free digital service when there's so much risk of needing to send letter mail, for example.

Implications

That's why I'm expanding my understanding of "self-hosting" on-chain issuer securities. This is very different from what Laylor's currently done, only be it for lack of an intuitive frontend for them to follow our system. And it's a lot more than the issuer records.²

Laylor is continuing on acting as their own agent only in the sense that they have an internal spreadsheet as their cap table. They aren't using tokens to track ownership or be the shares, as far as I know. It may look like they are because of my inadequate handling of their offboarding, which is my fault.

That's what I'm trying to scope down here, because you are right in that there is a huge benefit to trades and tokens existing on the blockchain so there is something empirical and auditable. I've tried to stay true to that vision by leaving accounts with frozen balances reflecting their state at Agreement termination. But the crucial point about this is those tokens are issued from the Syndicates' on-chain issuer wallet address.

Corporately, the company would have to create their own token from their own issuer wallet to use TAD3 on their own behalf. This completely changes the purview of records ownership, control, and connection with the investors. As it stands in a normal outsourced client relationship, all ostensibly administrative work like issuing new shares has to come directly from the Syndicate and our crypto signers, hence the legal arrangements.

If they were to maintain these resources themselves, then there could be a new form of token, presumably usissuer based on final share totals. Then the issuer would be responsible for the lost investors, among other things. That's a good thing in my mind, but it also places a large burden of ongoing offering compliance back into the hands of an unsophisticated accounting division (if firms even have that).

So, hence my inability to reconcile wanting the shares in the market forever with guaranteed service... and income, at least enough to cover costs. These search services scale pretty well horizontally, so maybe it'll be less of a struggle when we scale and spread out costs with better systems. But even just the key management will continue to take resources, resources which I do think would be well-spent and improve market quality and diversity, at the expense of bottom-line efficiency.

Lastly, I don't think maintaining the web resources will do much to profitability. I am more so pondering the effect of continuing access, especially if it is pulled into something like the DRS database as mulled in alignment tooling. Because investors make investments based on representations by the issuer in their statements, which should be retained for liability, even if that's just to promote the honesty our market needs.

Scope

LRF hits what I'm getting at a little more directly with our responsibility to do more than statutory contracts. But that is exactly what I want to do when it comes to having a repository of information for all issuers, across the different TAD agents. Because I grew up with disclosures only at the helm and behest of major central publications like Morningstar, who had incentives in their reporting which do not align with a lot of people.

I want something provably neutral, like a Wikipedia-of-sorts directly defined by the issuers of securities. I don't know exactly how to phrase that concept or put it onto a contract at the moment, but it's certainly beyond the scope of a normal profit-seeking arrangement. It's infrastructure that matters because it affects broad purchaser choices at a scale well beyond acting as agent for just one issuer. It is the allocation of capital based on the dissemination of information, for lack of a better phrase.

And that matters to me conceptually a lot more than whether or not a frontend app recognizes a dead asset and notifies users of an end to the service contract. Ideally that wouldn't make a difference because all the agents would use TAD3, and there'd just be a successor token. But here we have an instance where cost was the main dissolution factor, and I've been doing everything I could to minimize cost. In that case, I think investors should also be clearly told who the successor agent is, if one exists, so the continuity of records, servicing responsibility, and point of contact are not left ambiguous.

So, there's this edge case I have always wanted to avoid. What happens when the assets go back into legally controlled form? And it's not a path I ever wanted to witness.

Vision

You know how all the news sites list tickers based on exchange:name format? Like NSDQ:ABC or NYSE:XYZ (OK, that's a real one lol.)? I've thought it'd be so cool if we could have TAD-native direct offerings without the middlemen, and then the reporting just cites shares under SDEX:NAME. It's why I included a whole section in the agreement for a Company Code, which has extensive integration into the existing indexing TOML.

It might seem semantic, but tickers make a real difference in tradability. And their integration under a standard open-source protocol is no light task. If we are to do anything like modern identifiers for every single CIK, then we'll need a robust standard procedure which could accidentally look like endorsement.

Let us consider a future where this does take over, working out so well that the legacy troublesome central exchanges cease relevance. It's a relatively straight line for a market like the SDEX to make its way into government regulation defining quotable markets like a securities manual. All of a sudden the acceptance of an issuer with a specific code tag name means downstream bureaucratic regulatory checkmarks.

That becomes a heavy weight, even if we try to make it as neutral as registering a domain. As to the oddity of vetting clients, it will need to happen somewhere along the TAD chain. We can leave it to the agents or choose to take it on as the DUNA, but it's a choice that'll need to happen.

My semantic "not a scam" opinion doesn't scale as presently implemented. And with a more comprehensive dispute mechanism built around the Association, we may face this role. It was something I mulled about, and I think it'll take time to figure that out entirely.

But it's really not that far out of scope when we consider total ownership of at least the Syndicate, ignoring other implementers of TAD3. Any member could post a new binding vote to drop a client using the at-will cessation termination language from the initial VII agreement clause. And I would conceivably need to comply with that request.

I think this is a benefit hiding in the guise of governance complexity, because a decentralized mass can much better detect fraud than myself or even an autonomous internal committee. This may take some time to work out, because it's questionable if people would continually identify fraud selflessly for reputation or abuse the mechanism to enrich their own short positions. But it's a manipulation angle we can't ignore, especially in the early days where this one agent is the only way to access TAD3 without competition.

As for your last points, I sincerely invite you to edit and PR the code if you noticed any semantic errors in the headings. James did an awesome job helping with this in #2. It was my thought process that the stating date would be inferred by when the tokens were first minted, but I suppose that could be a bold assumption of on-chain analysis.

As for just listing all information without a client relationship, akin to the every.org model, I have a lot of challenges with that approach. Firstly, where could you even get primary-source issuer information? And I wouldn't want to accept scrapes from the legacy exchanges.

Secondly, if we start just posting about every company, that could pick up SEO pretty quickly. The existing issuers.info page for Laylor already has really strong search ranking, which is why the de-indexing in d795d7c seems important to me. The email from Laylor's CEO also shows that it is actively used as a definitive reference for information about the company, and it would only be more authoritative if we added a little SDEX trading price embed chart which showed company value over time based on the already-existing public data.

Footnotes

1. In what was the blocktransfer compliance disclosure site (eg), and has now become the entire site repo. ↩

2. Just to round that thought out before moving on, I think we should maintain all issuer statements perpetually. I've seen firsthand how historical data going back decades or more makes a huge impact on present-day trading decisions. I have no doubt the algorithms of tomorrow will make great and efficient use of historical statements, as they do today by scraping SEC EDGAR data. The rate limits the Commission imposed, precisely because of these bots, inspired early design concepts ¶ 5 for API tiers. ↩

[LastResortFriend]

I'm in agreement with Chives for the most part.

It's not BT's responsibility to maintain anything outside of itself and it's contracts.

I'm not fully up to speed on the benefits of listing non-clients, but I see great benefit in listing past clients and their contract date ranges, especially for investors who don't check in often and still think BT may still be handling things. Definitely include language that stops any endorsement arguments, this would be educational and bureaucratic in nature and by no means a page of endorsements.

[JFWooten4]

Here's the exact language in our beta issuer agreement:

The Corporation acknowledges that an external audit of the Statements is not required and will take responsibility for certifying their accuracy. All Statements will be prepared in accordance with generally accepted accounting principles. The Corporation retains the discretion to include additional materials deemed relevant and of interest to prospective investors.

The Corporation appoints BlockTransfer as its authorized representative to post the Statements online with the Corporation's name and likeness. The Corporation also relinquishes the right to veto or exert control over private sales of the Securities, including restricting the private sales to new outside investors.

That last sentence may seem unrelated, but it's one of the main reasons for disclosures in the first place. This rule lays out the best practices for interbroker quotations through an ATS. A cornerstone of its assumptions is public balance sheets and P&L statements.

That's why § III of the agreement¹ specifically asks them for annual balance sheets, PNLs, and even quarterly reports that are collectively the “Statements” on 5.² While obviously I do not see our systems as a brokered exchange, these are pretty good baseline disclosures, which is why the footer says:

This content, current to the best of our knowledge and scoped by SEC Rule 15c2-11(b)(5), is intended solely for educational purposes. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information presented. Block Transfer clients provide all material information presented, which we do not validate. We are neither an auditing firm nor a substitute for personalized financial, legal, or investment counsel. Seek advice from experts customized to your specific situation. We do not recommend buying, selling, or holding any securities. All investments involve significant risk, including total loss of value. Past performance guarantees no future results.

(Emphasis added)

Footnotes

1. The first one in my somewhat botched beta ordering. ↩

2. Addendum A also asks them for timely written notice of any legal violations that could affect eligibility for securities offering exemptions. ↩

[JFWooten4]

Syntax changes merged in db62fe1 without policy or wind-down contemplations, aside from SEO.

[JFWooten4]

I sent Laylor a nicer email, and they seemed happy with it. They are doing what they can on their end. So we have some breathing room to get the configuration right here.