Reasons to Buy GME – Buy and Hold GameStop

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*This post is for my reference & assurance to buy and hold GME, and not as financial advice.
**Refer to for latest research & due diligence.

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Investing in GME GameStop Value Buy


Ryan Cohen speech at GameStop AGM 9th June 2021

We ushered in a whole new era of GameStop.

On a personal note, I want you to know I’m humbled to be elected to your board and serve as your Chairman.

We have a lot of work in front of us, and it will take time.

We’re trying to do something that nobody in the retail space has ever done but we believe we’re putting the right pieces in place and we have clear goals: delighting customers and driving shareholder value for the longterm.

The management team and refreshed board will remain totally focused on
these goals at all times.

We know some people want us to lay out a whole detailed plan today, but that’s not gonna happen.

You won’t find us talking a big game, making a bunch of lofty promises, or telegraphing our strategy to the competition.

That’s the philosophy we adopted at Chewy.

Here are a few things we’ve done so far: refresh the board, added technology and retail experience to the leadership team, paid off all our long term debt and strengthened the balance sheet, and begun laying the foundation for long term growth.

Moving forward, we want you to judge GameStop based on our actions, not our words.

Thank you everyone, and as my dad would say, “buckle up.”

Short did not cover

SEC report GME

Company Share Structure


SuperStonk Library of DD, Artbooks, and Periodicals

Link to SuperStonk Library of DD, Artbooks, and Periodicals
More GameStop Due Diligence

DFV who is not a cat.

DFV all in

House of Cards – Due Diligence by u/atobitt

House of Cards PDF Full Version 2021 – complied by u/arkkadius

House of Cards

Quotes from Warren Buffett;

  • Only buy something that you’d be perfectly happy to hold
    if the market shut down for 10 years.


  • Nobody buys a farm based on whether they think it’s going to rain next year, They buy it because they think it’s a good investment over 10 or 20 years.


  • If a business does well, the stock eventually follows.


  • Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.


  • Time is the friend of the wonderful company, the enemy of the mediocre.


  • Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.


  • Our favorite holding period is forever.

Warren Buffett: Why you Shouldn’t Short Sell? (GME)

GME GameStop Short Squeeze 

Gamestop Moon
mcuban hold gme

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 1 (Dr. Susanne Trimbath)

TL: DR 🦍 Summary:


  • Cede & Co is a nominee name, banks and brokers have custodians they use for securities registration, any shares registered with a nominee signals the stocks are being held for someone else.

  • Cede & co came about owing to a paper crisis as trades increased, and they became the nominee to hold a majority of securities.


  • In a perfect world, there’d be no naked short selling.

  • In underwriting agreements, MM or agents can sell more shares than they have to meet market demand. When a share is borrowed, the rights of the share borrowed are also distributed with it

  • Brokers can know whether something purchased is borrowed if it is marked, but often direct buyers (retail) don’t know that they are buying short, borrowed shares.

  • There have been many cases of violations of brokers ‘forgetting’ to mark shares as short just so they can open the short position, even if this later has a high likelihood of becoming FTD because shares without this designation are more likely to be bought by brokers.


  • This problem of naked shorting, and by extension, overvoting is not restricted to GME at all, in fact, it appears to be a major issue industry-wide.

  • Even the CEO of the company Overstock, purchasing their own stock, couldn’t have their broker find the actual shares purchased, it took 2 months before they did.

  • The fact GME traded nearly 4x its float in 1 day is insane.


  • ETG filed a lawsuit that was settled outside of Court to keep things hush-hush, but it was based on their shares outstanding vastly exceeding their float.

  • You will likely never hear publicly about successful cases if settled.

  • Penalties have only recently been introduced for FTDs.

  • What’s the incentive for them? Money. It’s always money.

  • Before, they would take someone’s cash via FTDs, to then make more cash and only get a slap on the wrist for doing so.


  • DTC has a list of issues to rectify sorted by value alone.

  • By driving the price down, the short seller not only drives the price to the ground and makes money, but because investigations are dealt with on a value basis by the DTC, the further the price goes down, so does the priority level of the issue, in the DTC’s books.


  • Driving a stock price down restricts the availability of capital, which in turn assists in running the company out of existence as they can’t issue to generate capital.

  • The ultimate goal of naked short sellers is to make the company worthless, at that point, every action they’ve taken to manipulate the stock price and hinder the DTC investigating disappears into shredders and archives. 


  • Evidence and history have shown that the SEC will step in to help the FTDs of the banks, but they historically will not help other stocks such as GME.

  • The evidence is that the SEC prevented naked short selling of the bank stocks and no one else’s; whereas in Europe and Asia they protected all stocks from naked short selling.

  • Historically SEC examiners would approach the DTC and just ask, what do you do? (these are supposed to be professional examiners keeping brokers in check)

  • Dr. T then clarifies a lot of these people (brokers) ‘learn on the fly’ and the qualifications they hold are less difficult to obtain than a barber’s license in most states

  • The fundamental understanding of brokers is therefore suspect


  • Actionable steps that could be taken include, visiting and contacting their local securities administrator as they will pay attention, as her friend Patrick did. These are the people that want to know about this stuff.

  • Dr. T’s position is that overvoting is a huge problem, and it is not solely confined to stocks such as GME. In fact, even now 85% of stocks are over-voted and that’s because of the influence of a company who deals in trying to fix it, before, 100% of stocks in 200+ test cases were regularly overvoted.

  • Where stock is over-voted, this provides proof the stock is naked short sold and/or has a high number of FTDs. A problem prevalent throughout the industry.


  • The direct evidence of naked shorting exists and remains today in that over ⅓ of companies receive more votes than are actually outstanding.

  • FTDs have been classified in a new way, ‘open positions for which a trade guarantee is applied’ and on Atobitt pulling the same report Dr. T did at the time of her book, the problem has risen from a $4bn problem to a $183bn issue.

  • Dr. T explains she is not surprised the problem has grown to this extent, owing to the advent of ETFs, Mutual Funds, and increased trading, etc…

  • Dr. T warns all apes that you need context, like a denominator (her example, the Clearing Fund) in order to contextualize and understand your DD and appreciate the bigger picture.


  • In 2005, FTDs and naked short selling resulted in a (relatively if you read on) small $4bn problem. Now, the problem sits at $183bn, with a jump of over $40bn from just 2019-2020 alone.

  • Whilst stocks traded from 1999 to today’s date have increased by 23%, failures to deliver have grown by 95%.

  • Dr.T is not surprised owing to the increase in trades, ETFs, and mutual funds, and notwithstanding this, the number of trades and the Clearing Fund didn’t rise at the same rate as the FTDs as the potential loss.

  • Atobitt’s theory is they just want to have more cash on account to cover the fails, and Dr. T clarifies that the Clearing Fund just is not enough as it wasn’t in the 2008 financial crisis.

  • Overall, Dr.T and Atobitt agree the players think they have ‘too big to fail’ status to obtain a get-out-of-jail-free card.

  • Dr.T also states the Clearing Fund used to be based on your activity in the market, but the recent changes do not reflect that.


  • Fails to deliver were not properly calculated until after the 2008 crisis. Dr. T expected the Clearing Fund to rise when failures were introduced, but she still feels it is too short (ironic no?).
  • The DTCC and its subsidiaries are self-regulated and are therefore only beholden to the SEC and public review (hence rule changes anyone?)

  • When the rule changes occur, the cockroaches appear.

  • If fails and naked shorts were called out in the open, Dr. T predicts the numbers of both would drastically decrease.


  • Dr. T thinks that the difference apes are making is clear when you look at the DTCC and its subsidiaries.

  • We actually have them taking action, to combat the issues we are talking about.

  • Making rules changes acknowledges the problem, and acknowledgment is the first step to solving it.


  • Dr.T also speculated that legislation in the EU has the potential to be a driving force for further systemic change.

  • The reason the EU legislation may be a driving force is that they seek to pass legislation to force buy-ins for failures to deliver.

  • If it takes effect in Europe, it could ripple across the pond.

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 2 (Dave Lauer)

TL: DR 🦍 Summary:


  • Concerns over naked shorting are not just isolated to GME, there are concerns of this across many stocks.

  • Lending credence to our theories over the manipulation of the Short Interest Data through the options market.

  • Dave subtly mentions that through his research of public data he has seen significant manipulation in different stocks. Could not elaborate further though.


  • Government regulators move at a snail’s pace. This isn’t because they are corrupt necessarily, but rather this is the way of things with regards to the bureaucracy of government.

  • Gary Gensler coming in as chair is promising, as he seems to be regulation-minded which is exactly what we need right now.

  • The way to make this stuff move quicker is to keep the spotlight on it. Keep doing what we are doing.


  • The markets still employ archaic principles that made sense years ago, but now simply hold us back from having the best outcomes that we could achieve.

  • high-frequency trading in many ways can exacerbate extreme moves.

  • Latency requirements and competition over latency have increased over the last fifteen years – we are talking microseconds for transactions.


what is NBBO
  • Markets are designed to help us figure out what something is worth monetarily, and the NBBO helps with that price discovery.

  • Lit exchanges (NASDAQ, NYSE, IEX) are where you get price discovery (what is the stock worth)

  • Dark pools / off-exchange trading (NBBO) just ride off the lit quote but don’t affect it

  • In Canada, in the UK, in Australia, this kind of setup where trades go to someone like Citadel or Virtu is illegal because it can DAMAGE THE MARKET


market complexity
  • The market is an incredibly complicated, interconnected web of different exchanges.

  • it’s more expensive to actually go direct to the exchange, relative to going to a dark pool. Labeling exchanges “Toxic Venues”.

  • This is due to access fees:

    • A fee cap of 30 cents per 100 shares was implemented in 2007.

    • This has led to exchanges competing over rebates.

    • However IEX does not charge this, they charge only 8 cents per 100 shares on either side. (buy and sell)

    • Access fee cap hasn’t changed is forever, leading to exchanges fighting over ‘rebates’.


  • Price manipulation through ‘short ladder attacks’ or wash-trading is still being actively used and it is RAMPANT.

  • The sheer volume of data on a daily basis helps hide these tactics.


  • An ‘order book’ is essentially a collection of the highest prices someone will pay to buy, and the lowest prices someone will sell for security.

  • Depending on volume, if the price rises, more will sell and if it lowers, more will buy.

  • ‘Spoofing’ starts when an HFT speculates the price will rise above the current ‘lit’ price.

  • The speculation is that this price rise will happen very quickly, and HFT trading systems rarely hold onto inventory even for minutes, but more commonly milliseconds.

  • To sum up, where an HFT strategy determines the price will increase, ‘spoofing’ is the act of creating artificial ‘demand’ to essentially trick these HFT systems into thinking there is demand and they will then buy a stock en masse.

  • This in turn drives up the price as the other HFT take the artificial demand as a buy signal, to the point the spoofers sell price is reached, which allows them to sell at a favorable price for a profit. (Writer’s edit: Even the bots can be manipulated)


  • Non-linear systems are not easily explained. Just because 1+1 = 2 is simple for apes to understand does not mean that this is the case for HFT systems.

  • Complex, Non-linear systems as designed and described by Dave, ultimately are incredibly sensitive, and any number of factors can lead to flash crashes, not just manipulation, but this too isn’t out of the question.

  • Boiled down, not even regulators can predict the impact that changes on these systems may have, and history shows that it can be extreme.


  • Jack mentions to Dave that GME has seen many events that could be considered a ‘flash crash, such as the March fall in price from $345 to $173**.**

  • Dave clarifies that crashes such as this may not be inherently manipulative, in that algos are just trading as designed. When 90-99% of the liquidity of a stock is provided by HFT systems; in the event of an increase in liquidity occurs or when HFT’s determine they hold too much inventory, they may be programmed to ‘pull out’ which can cause a snowball effect on other systems and crash the price.

  • Notwithstanding the above, Dave does not discount that manipulation is an impossibility at all, but thinks it is important to recognize HFT systems can act on a positive feedback loop as described.


  • The markets are becoming so over-complicated with all these different types of orders, that not even the exchanges can keep up.

  • NASDAQ has been fined in the past for not being able to keep up and understand the orders on their exchange.


  • PFOF is more trouble than it’s worth.

  • It has been shown that PFOF can be affecting the spread at much at 25%.

  • It is very profitable for a large firm to trade against/ ahead retail orders. I am speculating here, but this is likely why this is such an important fight for Citadel. We, the customer, are actually the product, just like with social media.


darkpools internalizers
otc trading gme
  • So every time Citadel internalizes a trade, it gets printed publicly, every time, Goldman Sachs or Morgan Stanley, or JP Morgan executes a trade in their dark pool, it still gets printed publicly.

  • I’m always interested in learning more, I mean if there’s a mechanism by which someone thinks they’ve figured out how they can suppress the price through dark pools, I’d be really interested in that, because it would directly impact some of the analysis that I do.


  • IEX has a lot of functionality that can make for a better retail trading experience.

  • If IEX is something that you are interested in trading on, then contact your broker and let them know


  • Reach out to the SEC, members of Congress, FINRA

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 3 (Carl Hagberg)

TL: DR 🦍 Summary:


  • Carl explains that he was a ‘college dropout’ but worked his way towards a masters’ degree paid for by his employers.

  • Too young for college, Carl made his way to the Manufacturer’s Trust Company, where he excelled with his knowledge of long division.

  • Carl states at that time, most companies that dealt with stocks and bonds were ‘trust companies’ i.e. a specific company that acts as a fiduciary, trustee, or agent of trusts and agencies.

  • This was the case owing to companies doing… questionable things with their own books when left to do it themselves.

  • Carl lays out two rules for Trust Companies:

    • 1. Customers and stockholders come first.

    • 2. Debits and Credits MUST be equal.

  • Why? In the time of the ‘Robber Barons’, “...when they needed some extra money, they would print up some new stock certificates and sell them into the market“ Sounds like naked-short sellers are just the new Robber Barons

  • Finally, a trust company’s purpose was to ensure money gained from issued shares was put back into the company, and at that time, retail owned 70% of stocks.


  • At some point, share ownership became democratized (i.e. made accessible) to everyone, likely pushed by Merryl Lynch campaigns, and stonks went up with the increase in volume.

  • Problem? Paperwork crisis. Put simply, shares were traded by paper and the stock exchanges literally could not keep up**. They didn’t even have handheld calculators, much fewer computers, so brokerage firms failed** en masse**. As Carl puts it? It was a big mess.**

  • In order to solve the ‘paper crisis’, Carl and ‘leg men’ like him went out, took surveys, and tried to find solutions.

  • The above together with the advent of computing, and the birth of the securities depository, resolved the crisis within 2 years. 


  • Through this wealth of experience, Carl saw the good, bad, and the ugly in boardrooms, and learned to invest where he saw good.

  • Carl clarifies the issue of short-sellers, or vulture capitalists is an issue long faced in the industry.

  • Carl explains when he was a young boy (not in Bulgaria) he had been a part of shareholder meetings and can spot a good and bad CEO.

  • Carl goes on to explain that the issue of short selling has been going on for years and years, such that even good companies having even a ‘bad year’ could be shorted out of existence.

  • Carl then used his position and experience to create his own company and many clients were then asking, how is it possible 150% of my shares have voted?

  • How? Short selling and naked short selling.

  • Carl explains that even in non ‘naked’ short-selling situations, both the lender and buyer have voting rights, which leads to an increase above the total percentage of stockholders voting in an AGM.

  • When the sellers vastly outweigh the buyers, you have people trading in ‘phantom shares’ such that the sellers and buyers do not match the total stock, or float as we all well know.


  • Unfettered securities lending is a very problematic thing. A system such as this allows for what can essentially be described as “Infinite Liquidity” meaning they can just borrow again, and again, what was already borrowed before**.**

  • Further to the last point, these problematic securities lending practices lead to dilution of not only the value of the securities in question but also their voting power as well.

  • Ato reflects that borrowing against borrowing (read: hypothecation) is exactly what is going on with GME right now.

  • Carl agrees and goes on to state the then CEO of Overstock and Wes Christian led the way in exposing this behavior.

  • Carl then goes on to state that sometimes short-sellers genuinely believe a company will go bust, but other times, rumors would spread which, taken together with a fall in stock price, would seem true**, even if it wasn’t.**

  • Carl, Ato, and the mods agree such behavior is unethical and illegal.


  • Carl explains that the issues raised here were noticed by the SEC and have been for some time, except they have a terrible track record of doing anything about it**.**

  • Not even their own report, which detailed actionable steps from their Office of Audit was followed and put into practice. Oh, except 1 of 11**.**

  • What’s worse is that temporary regulations, like bandaids on a leaky pipe, fell off and nothing concrete was ever put in place to prevent this from happening.

  • Further, these issues and problems never truly saw the light of day as the investigations were based on dollar values**. What does short selling do?** Decreases the price and therefore, so decreases the chances of investigation and notice**.**

  • Allowing naked short selling throws the laws of supply and demand out the window.

  • The only way Carl sees the problem can be resolved is to have debits and credits equal to one another, or this will just keep continuing.


  • Carl explains that it is very rare that votes ever exceed 100%, so often the issue of short/naked short selling rarely comes up. Wonder what happens when it does?

  • Carl then explains a famous merger happened on the basis that those who lent their shares became unable to vote on the basis they lent their shares and in fact, those they lent succeeded in making a horrible deal**.**

  • Carl then goes on to explain somehow, when this does happen, it gets ‘straightened out’ and no one understands how.


  • Carl explains that the game for institutions and mutual funds is to make millions by lending shares out any which way you can, including allowing retail investors to enter agreements to allow them to do so without providing much obvious notice.

  • Carl explains that the game for institutions and mutual funds is to make millions by lending shares out any which way you can. Including, allowing retail investors to enter agreements without being super to allow them to do so without providing much in the way of obvious notice.


  • The vote count is the missing piece of this puzzle as of now.

  • Carl essentially confirms that it seems mathematically impossible that the shorts have covered.

  • He goes on to stress how difficult it would be for the bad actors in this situation, to reconcile the votes prior to the meeting.


  • Carl states he is hopeful that we will see change with Gary Gensler taking the lead. Going on to say we need a so-called “Plumber” for this system, someone to do some real work on this messy system.

  • Carl touches on a similar topic to what Dr.T was talking about, with regards to legislation being worked on in the “Eurozone” that could really bring forth material change.

  • Voting and being outspoken is the best way to force a solution here, and if you cannot vote, find out why from your broker, because as a shareholder, who has entrusted your money with this company, IT IS YOUR RIGHT.


  • This is one of the more difficult matters to address, solely due to the fact that foreign investors usually don’t vote, or don’t care to vote in corporate elections across the pond.

  • Despite the difficulties, remember, VOTING IS YOUR RIGHT. If you are investing your hard-earned money in a company, you’re damn right you deserve a vote.

  • If you are a Euro-Ape and your broker is being sketchy about letting you vote, you must do everything you can to speak up and speak out.


  • Carl’s advice to the heads at GameStop:


    • Read the Mail and Email from the stockholders, pay attention to those that feel disenfranchised

    • Hire an especially diligent inspector of elections

    • “TOUGHEN UP”

  • In past circumstances, predatory short-sellers have gotten away with this game– pushing the stock price to the point of being delisted so they don’t have to ever reconcile their massive dump of phantom shares.

    • There was confusion over the last section of the interview when Carl stated that shorts don’t HAVE to cover, I believe if you take this statement in context with the rest of the AMA, he is clearly referring to shorts having to cover, generally. Carl already states multiple times in the AMA that he is very optimistic about this GameStop situation. Anyone trying to twist this narrative is acting in bad faith

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 4 (Lucy Komisar)

TL: DR 🦍 Summary:


  • Lucy goes through and breaks down the situation surrounding Sedona (A software company) who was targeted by similar short-seller tactics to GameStop.

  • In order to explain Lucy’s case in point, she explains the story of the Badian Brothers and a company named Sedona. Sedona decided to finance a $2.5 million dollar loan where repayment was going to be made via shares, with the number required to be repaid dependent on the stock price at the ‘conversion’, i.e. 250,000 shares if the stock was at $10, or 2,500,000 if the stock was at $1.This would later be dubbed ‘death spiral financing’.

  • Sedona shouldn’t have been hurting as bad as it was, the company had a lot going for it, but for every piece of good news that would come out, the stock wouldn’t move or it would even go down (I wonder where we have seen that before). The goal was partially to carry out an asset grab on the company.

  • “Wes Christian told me that more than 1200 hedge funds and offshore accounts were working through more than 150 broker dealers and market makers to strip these small and medium companies of their value with these death spiral deals.”

  • It was thought that RegSHO would help prevent the abusive short-selling practice but there were too many loopholes that would then go on to allow the activity that we see today with $GME.

  • Lucy explains Reg SHO is littered with loopholes that, for example, don’t count fails to deliver on nonpublic exchanges! But

  • “And in the end, as we go down and look through the years, the decades… it ends with GameStop.


  • Historically, The SEC has not had a good track record in punishing the “big guys” for their misconduct, beyond a fine and a slap on the wrist. This has been corroborated by many different individuals at this point.

    • This is why it’s such a big deal that we are seeing The SEC working to change things now!

  • Wes Christian will have a wealth of knowledge on the legal side of this conversation.

  • Lucy goes on to mention that going through with legal action has worked, somewhat, in the past. Once a case enters discovery, that’s when the really juicy stuff can be uncovered.


  • In order to illustrate how the media can be bought and is corrupt, Lucy explains the story of Anthony Elgindy. Elgindy was an Egyptian who liked to pretend he was an Italian and ran an online messaging board, but not in the same vein we are now accustomed to.

  • This webpage was a hitlist, except it did not target people, but companies. Elgindy had contacts everywhere, including the SEC. So not only would this website determine which company was next to be hit; it would prompt SEC investigations to tank the price and paid for articles, as journos were on the take.

  • Journalists and others were bought using prepaid bank cards, which had a set sum of money that could be drawn from an ATM, usually in the region of $20,000-$25,000.

  • Elgindy was so connected he managed to somehow know about, and profit from (Editor’s note, I can’t contain my disgust) the 9/11 attacks, given he likely knew they were to happen and advised others to sell their entire holdings the day before**.**

  • Elgindy is now allegedly deceased, but no proof to this effect has been provided.

  • Notwithstanding the above disgust, this shows unequivocally that the media can, and has been, bought…


  • Lucy is shown the infamous Jim Cramer interview where he is talking about how he as a short seller would manipulate the narrative to fit his needs

  • When asked if she believes that mainstream media could be compromised, Lucy points out that in many cases the stories are picked up and spread out of laziness more than malice. Now that is not to say everyone is innocent, but many are just reporting “tips” or Press Releases without researching further.

  • Compensation can often mean many things to people, so when we speculate that someone in the media might be “Paid off” to report that a company is going to zero, it might not be cut-and-dry with regards to the methods of compensation.

  • How to find trusted sources of news, Lucy’s recommendation:

    • Check for evidence of claims made by said source

    • Document the claims to fact check later, most people never go back to see if what’s being claimed ends up to be true “People tend to forget”

  •  the one quick way to avoid being deceived is to stop watching that media”.


  • Lucy Komisar drops the amazing bombshell that she considers us the top source for well-researched and cited investigations into GameStop. Furthering that point by saying that it’s been decades since she has ‘wasted her time’ with television news as they are often reporting poorly researched, many times incorrect, information.

  • “If you want to avoid being deceived then my advice is to stop watching that media

  • Elle brought up a clip from the most recent Financial Services Committee meeting on Gamestop, where Representative [???] calls into question the tireless research r/Superstonk performs

  • This representative is then called out on his ignorance regarding our community, with Lucy scoffing upon being shown the video “he’s so ignorant.”

  • Lucy also shared our frustration regarding the participants in the hearing, essentially ignoring the main problem the whole time… which as we all know is Naked Short Selling.

  • When asked whom she thought was the best at all the hearings, Lucy says Keith Gill (u/DeepFuckingValue). Her reasoning was that he was one of the only ones to actually touch on the real issues here, and beyond that, he was intelligent and well-spoken.


  • As with our past guests, Lucy touches on the Overstock situation. Walking us through some of the events that transpired.

  • Overstock was a company that had been targeted by predatory short sellers in 2004.

  • Patrick Byrne (CEO of Overstock) filed suit against 11 huge brokers for using methods that we see being used on GameStop. (Lucy expands on how options can be used to create “Phantom Shares’ above.)

  • Lucy believes that the similarities between Overstock’s manipulation and Gamestop’s manipulation are too big to ignore, going on to say that the Overstock situation is where a lot of the techniques we are seeing today, were perfected and refined.


  • The solution has been clear for ages, perpetrators of these large-scale financial crimes must be punished with more than just a fine. These fines are no more than a “Cost of doing business”, this problem has been pervasive for far longer than it should have been.

  • Those that knowingly manipulate our markets for their gain, must be given serious jail time. 


  • Lucy praises r/Superstonk’s DD, purely on the basis the authors of the DD and others cite their sources and data, which Lucy always follows.

  • In response to the question on how to understand the number of shares outstanding, Lucy states it seems apparent FINRA and the DTCC know what happens openly, but not off-exchange which is where the real dirty stuff goes on.

  • Ultimately, it is Lucy’s opinion no private person (or ape) could ever know the number of shares outstanding, those with the best idea would be the DTCC and its umbrella companies, but neither they nor the big prime brokers seem like they’re going to spill those particular beans.


  • In response to a query from a Euro-ape regarding the prevention of naked short selling, Lucy explains she is not so familiar with Europe but is very familiar with South Korea and applauds their efforts at tackling the issue.

  • Lucy recalls that an attempt in the US was made to prevent naked short selling, via assigning each particular share a unique numerical identifier, and in order to short, that share’s ‘number’ must not already be spoken for in respect of another short position, or else it can’t be shorted. This got completely knocked down more than 10 years ago. Nothing to see here, move on. Lucy hopes this can be revived again.

  • Elle explains that those from South Korea call themselves Ants, just as r/Superstonk does apes; all are welcome here. 🐜

  • In response to a question regarding being threatened, Lucy explains she has not received personal threats. The biggest threat to her as an independent, investigative journalist is the threat of never having her stories heard.

  • Lucy then goes on to state she hopes to be published for her book which seeks to outline in great detail this story, which couldn’t possibly fit within an hour of interviewing.

  • Lucy believes it is important never to put anything behind a paywall, and thanks any and all who could support her in any way. The apes are grateful for her time!

  • Lucy’s final message? Keep doing what we are doing. Expose the truth, follow the numbers and the data.

  • As an aside, she implores apes to check out the UK and Canada, as well as the US as this stuff is not isolated completely within the US market. At least the US market does not allow rehypothecation above 140%, whereas in the UK there is no limit at all**. Hear that UK apes? Get digging!**

  • Finally, Lucy explains that the appointment of Gary Gensler is bullish… no wait, a good thing on the basis he seems better than the previous 9 before him, but only time will tell whether big G slaps iron-on wrists, instead of just polite business cost slaps we have seen in recent times.

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 5 (Wes Christian)

Naked, Short and Greedy: Wall Street’s Failure to Deliver – Part 6 (Lucy Komisar & Wes Christian)

CNBC Full 15 Minute Interview with Garry Gensler HD (Unedited video feed)

The first page of the letter /u/dlauer referenced today on CNBC.

Written by Citadel, to the SEC in 2004

Citadel arguments 2004

Here is the SEC Comment letter that was written by Citadel in 2004 that /u/dlauer is referencing, which discusses conflicts of interest for payment for order flow, and internalization without meaningful price discovery, etc.


alternate link

The 2 mins clip, that CNBC removed from the interview with Garry Gensler, Chairman of the U.S. Securities and Exchange Commission


Computershare AMA “Ask Me Anything”
(Paul Conn)

TL: DR 🦍 Summary:


Jsmar18: Thanks for joining us paul, this is paul conn and this is the president of global capital markets, thanks for joining us

Paul: I head the global capital markets group at computershare, quiet a large reaching role looking at providing solutions to clients and their investors, looking at major market market structure challenges and changes and looking at new commercial opportunities – a rather small group of people positioned throughout the world

Timestamp: 00:44

Jsmar18:Let’s get kicked off with the questions, the first one which i can’t avoid asking is what is the maximum price that you can sell a share for through computershare?

Paul: That’s a good question, we’ve seen a lot of traffic come through on twitter and reddit asking that.

There are really two parts to that the first part is, what’s the trade consideration, what’s the maximum value of an order you can put on a member (exchange). The second part relates to the max limit price of a transaction you can put on our platform.

For the first one, on our FAQ as well – once you move over the $1m trade consideration, we’d like to receive the order in writing. In actual fact people can go on our web based platform and put an order on for $1m, nothing stopping them putting another order on – you can put many orders on and they are not really capped that way. So hopefully that puts a lot of your audience at ease.

As it relates to the second point, the maximum limit order on a tractions is just under a quarter a million of the dollars – don’t ask me how we get to that as i don’t know the details, our technical team looks after it and it’s something we’ve seen a lot of discussion around and we’ll monitor it as something that needs to be increased.

Timestamp: 2:41

Jsmar18: Okay, so if you say if you need to increase it, you’re saying you can increase it if it does eventuate in that scenario?

Paul: Yeah, we’re looking at how long it’ll take to do the increase, something we’re conscious of and something we’re taking a look at as people are making a lot of noise about that.

People can, of course always be directly registered on our books themselves through their self ready broker.

Timestamp: 3:24

Jsmar18: Great, thanks – moving onto the second most popular question would be IRAs.The main thing is, can people actually direct register their IRA shares?

Paul: There’s a few different parts – none of these questions are simple one word yes nos.

There should not be any specific reason why someone can not move their shares from an IRA and directly register them – at least from a market transfer directly registering perspective.

There max be tax consequences of doing that, and an investor should talk to their own financial advisor to find out what the implications are. Computershare are not advisors. Some of our clients will allow an IRA registration on their own books, which we administer for them. So it really needs to be looked at on a case by case basis.

Timestamp: 4:35

Jsmar18: Okay, so very much case by case – that’s fair enough. Are Computershare looking to offer any custodians services for IRA at the moment?

Paul: Not at the moment, we’re always looking at new commercial opportunities as it’s hardwired into our DNA and it’s clear whether Computershare need to be a IRA provider in order to solve this particular issue. So not at this moment in time.

Timestamp: 5:02

Jsmar18: Fair enough, that makes sense – moving over to transferring from brokers and buying shares. The past month or so people have been looking into the DTC and how the DRS actually works. Could you help us understand the process is from the start when someone requests direct registration through the shares landing in their Computershare account?

Paul: Sure, let me do that by first answering the piece which is directly under our control which is when the DTC initiates an electronic transfer under one of their broker-dealer participants and registers shares on the Computershare platform under the investors name. When that occurs it happens on a daily basis, we will record the investors name on the register and issue a statement to recognise that registration. Indeed the process between the DTC and Computershare is very fast – as for when the investor first communicates with the broker and the broker puts the transaction in the DTC system, we really have no visibility of of that whatsoever and is something we have no control over. It may take a few days for a broker to give effect to that transaction, we’ve seen some chatter that there has been some extended periods, but that’s really a broker client matter that we cannot matter.

Timestamp: 6:40

Jsmar18: and to clarify, do you know if the shares are removed from the DTCs books?

Paul: So when one of these DRS transfers occur, when it comes out of the DTCs system and into an individuals’ name we employ a double entry accounting process – where we put Jack’s name on the register and take one share away from cede and co – which is the DTCs nominee, so we are taking the share out of the DTCs name as it were on the register. In that respect, the register is always kept in balance for the register’s share capital.

Timestamp: 7:21

Jsmar18: The community is big on hypotheticals, and there is a lot of interest on direct registering shares on stocks that have been naked shorted, creating what is known as synthetic shares. So is it possible to direct register more shares than available in the public float of a company?

Paul: Okay, there is a lot in there and let me park the comment on synthetic shares – not trying to dodge that but i’ll come back to it. As it comes to relate that if we can register more shares, the answer is really no, in order to put your name on the register, we need to take a real share off cede on co on the register. This is what needs to be done to keep it in balance.

When it comes to synthetics, and concerns people have around short selling – that’s really a step removed from CS and the role of a transfer agent. That’s really what is happening behind the scenes at the DTCs and how they hold the shares in participant accounts, being banks or brokers. In turn now holding accounts for individual investors – this is not visible to the registered transfer agent.

Timestamp: 8:49

Jsmar18: So it’s not really related to CS in that essence?

Paul: I think it’s all related because these are investors in companies we are the agent for so we have an indirect interest in it. We’re definitely not the cause of it.

Timestamp: 9:07

Jsmar18: Is it your responsibility to look after it as the transfer agent?

Paul: It’s not really our responsibility to look after it because we often don’t know it’s happening which is one of the many challenges that people have. We’re talking about a distributed set of records that no one in the marketplace really has the entire access to. So it’s not something we’re repsionsuble for, we’re responsible for what shares are on the register.

What the DTC needs is to make ensure each of its records balance with its participants records and each of the banks and brokers need to ensure their records account for their customer assets as they have net positions for shorts and long – but that’s really the beyond the scope of what CS look after.

Timestamp: 10:09

Jsmar18: So if direct registering does stop, due to all shares being directly registered – what actually happens to people who want to still register their shares?

Paul: That is a really good question, I think it is, at this point in time, a hypothetical, but it’s a very important hypothetical. So it’s right for people to ask. It’s really, I think, unprecedented in a public company since where the company is transacting on the marketplace so I’m sure that that trigger point or even surely before that trigger point there will be discussions amongst the company, the exchange, the DTC to talk through what the ramifications of that outcome really ought to be.

Jsmar18: ok. That’s very interesting. So the conversation would very much be, basically be discussed between parties who have an interest in this.

Paul: Well I think the regulatory organizations would have a look at that because, if I’m understanding your hypothetical correctly, you’re saying if every share is registered on the books of the company, which it is today, because one of the large shareholders is Cede, but if Cede goes to zero, and there are third parties that hold every issued share, i think your question is what is the status then for everyone who has a share in their brokerage or bank account and what happens to trading and that will be an interesting set of discussions if and when we get there.

Timestamp: 12:00

Jsmar18: ok, so this comes back to, you know, as retail investors (?) how are we ever going to know how much stock we’ve collectively registered? Is there any way we can actually inquire for this information? Is it your responsibility or again the company’s responsibility?

Paul: So we have 2 ways of reporting ownership, the first is to the public company itself, our client. The client has online access to the entire issued capital that we are recording and we have affected administration on their behalf as agent and each investor has access to their own portion of the register, their own account or holding on the register. You know, it’s a little bit like a bank account. You go online to check your cash in your bank, you can see your cash, but you can’t see any other kind of subset of like-minded people and that I think is what a lot of people are trying to grapple with just how to do that when the information’s not in the public domain.

Jsmar18: yeah that’s right, I think it’s natural that humans want to kind of get certainty on these things by understanding the data. But, from your side it sounds like it’s not really computershare’s side or responsibility to do that, and it’s more so the company’s.

Paul: I mean look, just balancing those 2 points, we act as a company’s agents, so we can’t just automatically decide to just publish statements of the data, even if there is interest in it. I think the company might need to consider from time to time if it should do that or maybe if a regulator may suggest to a company it might be a good order thing to do, to keep people fully informed but we’re not there yet.

Timestamp: 13:50

Jsmar18: Thanks. Moving on to brokers, in terms of the actual DR brokerage process, many people have observed that there’s broker pushback when it comes to transferring shares, a prime example would be Etoro as of recent, who have straight up refused to direct register shares for customers who had purchased them. So in these instances where there is broker pushback , is there any route retail customers can take where we can escalate it or actually force brokers to direct register the share?

Paul: Ok, well you kind of laid it in on a real specific there and I think there’s a more general.. Maybe if I just step back and just talk about.. An investor that’s got an account with a broker, let’s say a U.S. broker that happens to be a DTC participant, should be able to get a transfer into DRS forms so the investor can hold their shares in their own right. That shouldn’t be an onerous process. The broker may have many requests coming in simultaneously, so things might take a bit longer than they might otherwise but there shouldn’t be extended delays.

When you start to talk about online brokers, an online broker let’s say in Europe or down in Australia, it mainly gets down to how that broker is holding shares in custody because the underlying shares generally would be in the DTC. So an International broker usually would have a custodian arrangement with a DTC participant or there might be 2 or 3 parties in the chain so ultimately the length of time it takes will get down to how simple or complex that holding structure is, how many people are in the chain. There may be some international brokers that just don’t have the functionality to do this type of transaction because they never envisioned that it would ever be needed. Obviously the issue that I think people are grappling with ‘Does the broker always have the shares I want to transfer’ that’s really an issue the client and the broker need to work through.

Timestamp: 16:06

Jsmar18: In Terms of, would you actually suggest you know, basically, continuing pushing on, if this is retail, to encourage brokers like this to actually invest in the processes? Because to me, it seems like direct registering your shares, it shouldn’t be the brokers saying no and blocking this off, they should be able to provide this option.

Paul: Yeah look, that is a good question, and I think the situations that we’re seeing in the marketplace now, kind of throwing up some unusual situations, right, in every stock every day of the week, so it’s not unreasonable for a client to be asking their broker why they can’t do it and if it’s a lack of functionality, why the broker doesn’t have the functionality. I mean we’ve seen situations, and I’m now just reading things that have been reported in your forms- some investors, some customers, have actually changed their broker in order to get a broker-to-broker transfer of the shares, then to us, the third party broker to DRS the shares into Computershare. One of the things I’m really amazed about is the way in which information is being, there’s clearly a thirst for information in the community and how people are collaborating by sharing information, and really becoming quite inventive in terms of how they put these transactions together to ultimately get on to the register. But there’s no single silver bullet here, you need to really talk to your broker and try to understand why there’s some reluctance to transfer, and ultimately an extreme situation would be to talk to the regulators to see why that’s the case because we’re talking about, in all cases here, financial organizations that are regulated in each of these markets.

Timestamp: 18:09

Jsmar18: Ok, so moving on, people were kind of confused about seeing fractional shares on your platform, and that you actually display them, and it rightfully raised some eyebrows as a few people assumed that only one person can claim ownership to a single share certificate, and fractional shares is something that’s kind of a broker thing in terms of how they purchase it, etc. so how do fractional shares actually work when it comes to ComputerShare and ownership? Do I share ownership with someone else if I have a fractional share?

Paul: Ok, well let me try and answer that. There’s a few different parts to this, so if we’re talking about the direct registration system and how shares are recorded in individual investor’s names on the register, only whole shares are transferred, either from the DTC into the investor’s name, or from the investor’s name back into the DTC, so we’re always talking about whole shares there. Fractional shares can come about through the Direct Stock Purchase Plan that we operate, where we buy shares and record them in the investor’s names. In that situation we have the ability to offer fractional entitlement to shares and those shares can at any point in time be moved from the purchase plan into the direct registration system, so they can be separated out as well.

Timestamp: 19:37

Jsmar18: That makes sense, essentially when it comes to share ownership, with the register itself, you don’t actually own that fractional share.

Paul: So when you look into our system, you come into the investor centre, you’ll see your total number of shares, it may be made up of a book position and a DRS position, the DRS position you own absolutely unfettered in your own name, the shares that are in the plan represent a pool that we operate on behalf of the investors, those shares can be withdrawn and put into the other part of the account at any particular moment in time. So you can buy shares through the plan, you can immediately transfer them from the plan into the DRS portion of the holding.

Timestamp: 20:22

Jsmar18: Ok that makes sense, thanks. So when it comes to buying shares through computershare, it’s been theorized that the broker places large orders on the exchange that essentially represent an cumulative amount of buy orders from yourself and computershare. Do your brokers lodge these orders on the exchange when they come through, or do they wait and accumulate them, and then wait to execute them as a batch order?

Paul: So when we’re talking about purchasing, we purchase within a batch, so we will accumulate orders through a 24 hour period, and we will lodge that aggregate order with the broker that acts on on our behalf, just around or just after when the market opens. So we leave it with that broker to determine how to work that order through the marketplace, so that will be driven by how big is the order, how liquid is the stock? We’re always looking for our broker to execute these trades on lit exchanges on the markets.

Timestamp: 21:23

Jsmar18: When you say lit exchanges, are you referring to specific exchanges? Do they have to execute on NYSE or Nasdaq etc?

Paul: They have to abide by the national best bid and offer so that’s a rule that binds, so they’ve always got to look at best execution, but we’re looking for them to execute these transactions on the NYSE or the Nasdaq , not in dark pools. I think just to be clear, if that’s where you were heading.

Timestamp: 21:54

Jsmar18: Yeah, you’re right. So they have to adhere to the NBBO, that makes sense. If a company is listed on NYSE they don’t have to purchase through NYSE themselves?

Paul: The company might be listed on NYSE but it will trade on a number of different venues..

Jsmar18: Retail is used to relatively quick order executions, so I think that was kind of a surprise when there was, you know, batched together..

Paul: Maybe I can jump in without being rude, that is how the purchasing works. If you want to sell securities you’ve got the option of doing a real-time transaction with us through the web or selling into a batch and going through a batch process. Or you can sell through your own broker. There are lots of opportunities for you and choice available to you when you are selling.

The point that I made earlier, that is how we accumulate the shares when we are buying shares through the plan. But some parties might say well, I am going to execute my order in real time to purchase the shares through a broker, and then have the broker DRS the shares into Computershare. So there’s are lots of, plenty of choice available to people.

Jsmar18: Yeah, we have definitely seen people do that in terms of buying through brokers and direct registering.

Paul: When you are selling it you can sell real time through us. When you are doing a real time trade through us, the turnaround time can be very very quick, you know, assuming there is a counterparty in the market to buy the shares that the broker is selling on behalf of you all.

Jsmar18: Ok. So, we execute on Computershare, which then sends it to their broker which will then execute it on the market accordingly.

Paul: We use highly integrated systems to so that we are not sending carrier pigeons with pieces of paper saying ‘please run to the floor of the stock exchange and execute selling our shares’. It is modern and pretty fast.

Jsmar18: I think you will catch some flack for that analogy of carrier pigeons with the way these mail out at the moment.

Paul: Oh well you can come back to that okay. I am sorry I walked into that one.


Timestamp: 24:14

Jsmar18: So to touch back on the point again regarding selling. So, is there a major difference between selling though Computershare, who execute through their broker vs. transferring out of Computershare to your broker and selling though there. Surely there would be a delay if you get into that second option, right?

Paul: Let me just address that and maybe dig in a little bit more to selling through Computershare. So, you know I have explained that through Computershare you have the ability to elect to do a real time transaction through our electronic system which is connected to our brokers electronic systems, so that can go straight through into the marketplace. If that order trades, the confirmation will come straight through.

So actually, selling through Computershare can be very very fast and effective if there is a market in the securities and that round trip can be fast. If you are selling through a batch, the process of executing out of that batch obviously then is slowed down because we do that once a day. Small positions can typically go into a batch. When I referred to the fact that people can transfer their shares through DRS back to their broker, or more accurately, their broker can request the transfer of shares through DRS back from let’s say Jack’s name into his broker’s name. Umm, that potentially might give you some delay in executing your order through your online broker.

Some brokers may be prepared too depending on the individual and their arrangement with their own broker, if you have got these particular shares and they know you’ve got them, they may let you execute straight away. Now, when they have got highly mechanistic platforms where everything is driven by the Internet, they will probably want those shares to land in your account before you can put them on a particular platform. It will differ by broker by broker and client by client depending on the commercial arrangement between the two.

Timestamp: 26:30

Jsmar18: Okay, that makes sense. So, on the buying side of things, you touched on this briefly before when it comes to the Direct Stock Program, I think. So when buying shares through the Direct Stock Program, are those shares potentially being purchased from the company’s authorized shares that are currently aren’t outstanding?

Paul: No, those shares are purchased on market. Through the market and then we bring them into the plan, and once they are in the plan, you as an investor can say I want to take them out of the plan in pure DRS form or you are happy to leave them in the plan, that choice is yours and that is the difference between the fractional component and the whole shares component.

The whole shares relates to shares held through DRS and fractions relates to any component you may have in the plan

Timestamp: 27:24

Jsmar18: Awesome, thanks for that clarification. So moving onto dividends, which is probably the most wildly discussed topic when it comes to our community. When Computershare came to light everyone started to ask themselves how an NFT or special dividend would be handled. I am aware you have coordinated this before with other clients, so how do you make sure that you have the capability to support blockchain based dividends. I am curious what the process was historically for actually handling that?

Paul: Okay, historically, many of our clients pay dividends, they pay cash dividends, they offer stock alternatives, that has been quite routine and those arrangements are in place in many of the markets we operate in around the world. In the last few years we have started to see some clients ask if we could provide dividends through less traditional means.

Initially here I am talking about one particular party that came to us and said ‘could we pay the dividend through fractional gold entitlements, where gold is secured in a particular vault?’ We sat with that client and worked through the mechanics of that to see whether if that was cost effective for them to do that at scale. That’s an example of potential demand.

More recently we have had people ask if we can pay dividends in crypto. We have a couple of private companies (like unlisted clients) who have asked us to pay dividends in USD and offer their shareholders the ability to take a transfer of (in this particular case it was bitcoin), so we were crediting bitcoin to wallets.

One of our clients (and this is in the public domain so I think I can mention it), Overstock was involved in distributing a dividend through its blockchain and we have for a number of years now, have had the ability to connect a blockchain to our registry platform so that we can credit the security, if it is in fact a security, to the ledger.

Jsmar18: Okay, so when it comes to that, in terms of actually receiving it you essentially credit and recognize it on the user’s account.

Paul: yes. Yup, yup. Look a lot of this gets down to what scale does it need to operate at and what is the nature of the dividend? Is it a security itself? Or is it not a security and it is some sort of perk?

Depending on whether it is a perk or a security might influence how it has to be physically distributed to the owners of the company. That’s where we just need to sit with the client and understand exactly how they want the dividend to be structured and then we will run through with them the logistics of how we get it from them to their particular shareholders. That is what we specialize in. If it happens to be a blockchain based entitlement we will work with them to work out how we can get all the wallet addresses to effect the credits if it’s crypto of some other type of digital asset into the right parties hands.

Paul: I think being on the register is clearly an advantage there because there are no intermediaries really sitting between the issuing company and the investor. Computershare’s role is really that of an agent acting for the issuer. Where there’s an entitlement that has some real monetary value of course people that are holding their shares through banks and brokers will want to take receipt of that entitlement, and that’s where some of the complexities come in. It’s kind of hypothetical without a specific example to sort of look at but I’d be happy to kind of dig into this some other time, you know once…

Jsmar18: Yeah that sounds like a good session. Big hypothetical session… <inaudible>

Paul: I mean we love stuff like this, this is why we get out of bed in the morning, it’s like when there are unique kinds of situations, where clients want to do things.

Timestamp: 31:50

Jsmar18: Fantastic, so we’ll move on from dividends because it sounds like you will consult with the company to essentially execute whatever they’re trying to do, and I think that’s enough reassurance to people in terms of that is the service you provide, which makes sense. Moving on to the international side… and I know we’ve only got… how long left now, maybe ten minutes.

Paul: Ten minutes, we’re good.

Timestamp: 32:00

Jsmar18: So moving on to the international side, we’ve got people who are part of our community from all over the world and they’re curious. You offer certain services, based in the US, but are you also planning to offer them internationally as well, such as the purchasing of stocks directly?

Paul: Hey great question I mean we probably never had this much attention as we getting just at the moment from people all around the world that want to focus on a particular narrow range of securities so it’s interesting for us to try and understand what the demand is and we are not a broker we’re a transfer agent, so there are some restrictions in terms of what services we can offer in which jurisdiction so that’s an issue that we’re taking a look at this moment in time but we’re always looking for opportunities to broaden our ability to service a corporation’s international shareholder base. When you have a dual listed company for example where we’re actually running registers in multiple countries in each country has connected to the stock market infrastructure in each country in many of the situations in the US, the US is the only place of formal listing and therefore investors around the world who are working with local Brokers around the world those brokers, in turn, are working with people based it in the USA so you have a different holding structure and our ability to service those international investors is not quite as flexible as when you have the securities listed in multiple markets.

Timestamp: 33:55

Jsmar18: Touching on the account creation process, specifically, because I think that that’s kind of been a pretty big problem in terms of the funnel. So, are you looking at making that faster for international customers, because right now, you’ve got to wait and you’re expecting <for the> mail to come through to get that login to your CS account. Are you looking to make that process faster using email instead?

Paul: Thank you for the question. We’re always looking at that and international clients are not being particularly prejudiced against here. This is a process from a risk management perspective where we have opened the account on the platform and then mailed the pin to the investor. Now many people are reminding us that there are other ways of doing multi-factor authentication. We’re often looking at that we’d like to make the process faster we have recently in the Australian market, introduced two-factor authentication for certain processes and we’re keen to see that be ported into different markets around the world including the US so it’s really balancing off efficiency against risk management. But we’ve heard everyone loud and clear, we’re not happy if it takes someone three or four weeks to get a pin through international mail so I have a couple of people looking at that right now.

Jsmar18: Awesome, fantastic, I think they will be very happy to hear that.

Paul: Well they’ll be happy once we switch to something else that gives them instant access but we hear you loud and clear.

Timestamp: 35:38

Jsmar18: Awesome, so people are also interested in the type of capabilities that your customers, and by customers I mean the types of companies that work with you and choose you to be their transfer agent. Do companies opt-in for the feature you provide that allows for the live counts of registered shares?

Paul: Sorry Jack, can you mention just the last part again I just missed the last two or three words please.

Jsmar18: No worries, so do companies commonly opt in for the feature that your provide to them which is that it allows for a live look at registered shares?

Paul: Right, ok, I understand, so all of our registry or transfer agency clients have the online access into our platform and most companies will take that it’s part of a standard package that is offered, so that is immediate in terms of online access to the records that are on the register at that point in time so when you use the term live it to me implies can they actually get a dynamic count of shares that are transferring now where the records being transferred our books they would see that in real time as they appear into our platform but they don’t have the ability nor do we provide the service to see the real-time transfer of security in beneficial ownership form within the DTC there are some parties that provide or trying to provide that type – no one really has access – only the DTC knows what she is being transferred between particular participants and only brokers or banks know which of their customer accounts are being impacted by that so no one has the ability to kind of dip in real time and tell you what’s actually being transferred.

Jsmar18: Well, we’ll wrap it up today and I just wanted to say thanks for joining us and hopefully, we can get a part two along the way depending on if we have any follow-up questions.

Paul: Yeah, we’d be happy to do a part two, we know you’re trying to cover a lot of ground and when I was working with Yin and Joe it was clear that we might struggle to get it all done in 45 minutes. We’re very happy to do a part two with you I’ll let Yin talk to you about the logistics of when that needs to get shot and how you stitch both pieces together if that’s how you intend to do it but I’m sure whenever you release this it would generate a whole bunch of other questions and we’ll pick that up thereafter. Happy to do it.

Jsmar18: I’m sure it will. Ok, great well thanks for your time again Paul, we can wrap it up there. Great Chat

Paul: Ok, cheers guys I hope you enjoyed it so thanks for having us.


TL: DR 🦍 Summary:

Hi everyone, thank you for all of the questions. Our AMA guest /u/2021Demosthenes is a senior exchange executive, and has gone through them and answered to the best of their ability. Below are the questions and answers. Please feel free to post any follow-up questions or additional questions, and they will do their best to respond starting at around 4pm ET.

Q: What happens when the entire float of a company is direct registered if there are still mysteriously outstanding shares? Putrid-Initial-3864

A: If i was an investor – i would send a letter of inquiry to the issuers’ corporate counsel office and/or investor relation team.

Q: Does DRS reduce liquidity, and if so is there any danger that stocks without enough liquidity would get delisted? Taratds

A: It is possible that DRS can reduce liquidity or what is called “free-float”. This is not legal advice, but i don’t believe it is possible to be delisted on the basis of liquidity. Any such de-listing rule would have to be defined within the respective Exchange’s rulebook.

Q: Do institutions DRS their shares? I ask this because I’ve found a couple of tickers that have institutional ownership alone above 100%. How is that possible? (u/stickninjas)

A: I would suspect so, but i do not know.  Only the issuer and investor would know if they are in DRS.

Q: If a platform (eToro in this case) is able to purchase directly from a liquidity provider, can they say that they are not able to transfer shares because they are not an exchange or a market? (u/micascoxo)

A: It’s unclear to me why eToro would source shares from a liquidity provide? I am unfamiliar with their business model. Not legal advice,  I am not familiar with eToro’s customer relationship agreements but generally – no – there is no reason why a broker could not transfer shares, they are your shares and you should be able to manage them how ever you feel necessary within the existing rules.  Exchanges have nothing to do with “transfers” of ownership unless there is a transaction at which time they send records to DTCC to say x bought/sold to y.

Q: What rules or regulations prevent a company from announcing publicly how many shares of their stock are Directly Registered Shares? What is the “official” reasoning for these rules/regulations from the SEC and the Self-Regulating Financial organizations? What would be the consequences for a company that released these numbers for public consumption? (ancapdrugdealer)

A: I am not familiar with any such rules.  The company/board could determine that they want to share that info. DRS is not generally not a common part of a daily back office function of brokers and issuers. I would not be surprised if most of them were completely unaware of its existence.

Q: What is the best way retail can find out the total number of shares directly registered? And the total number of votes that were actually cast, without any sort of normalization or truncation to match the float? This seems to be very basic information that should be available to the public, unless their (those making up all the rules) excuse is crime. (mailkrishna12)

A: Most issuers only require a quorum of voters to be recorded so you don’t get a full count at every vote.  The dominant thought is that ownership of shares is best kept private.  As i stated in an early question – most issuers/brokers are likely unaware of DRS.

Q: If there is only a digital register of shareholders, how does a shareholder provide proof of ownership themselves? CheetoBandito11

A: In the context of DRS, the shareholder details are recorded when it’s transferred to their name as beneficial owner.  When there is a vote/dividend – that information is used for distribution of voting cards/funds.  

Q: As the system stands now, who is in the position to confirm when all shares have been accounted for at the transfer agent? Good_looking_corpse

A: There are no shares at the transfer agent –  a transfer agent has a responsibility on behalf of the issuer to maintain the records of stock certificates and their shareholders.  All records of shareholders are stored at the DTCC  (DRS or non-DRS) and it’s the transfer agent that has access to all those records. More info  on the role of transfer agents can be found here ->

Q: If all shares of a security were to be accounted for at the transfer agent, do market maker exceptions to promote liquidity supersede the rights of shareholders? Good_looking_corpse

A: Regulation SHO contains an exception that allow market makers, and brokers to sell regardless of the number of accounted shares. 

Q: If you have opted for dividend reinvestment and then the company offer a special NFT dividend, what happens? Does computershare try to reinvest it some how or does it stay on the books waiting to be claimed CheetoBandito11

A: I don’t know the specific answer here nor am i familiar with a “NFT dividend” but computershare shouldn’t be reinvesting anything in their function as a transfer agent. It could be they have an affiliated broker dealer that may offer the service you described. Investing is done with a broker – it may be possible that computershare works with affiliated brokers to provide such a function.

Q: Yes/No – Removing shares from DTC circulation will result in increased demand for the security on DTC run markets Good_looking_corpse

A: It depends. when the amount of free-float is low- data suggests that prices are more volatile, bid-ask spreads widen if there is increased demand.

Q: Can a security issuer trade completely off the trading exchanges regulated by SEC? If Gamestop were to account for its own shares and issue a dividend confirming the ~61.5 MM shares, is it legal for a company to sell private shares on a private network outside SEC purview? Would they be de-listed? Good_looking_corpse

A: Hypothetically, a company does not need to be “listed” on an exchange to sell shares to the public.  Being listed on a national securities exchange requires that they must follow the Exchange’s rules.  A company can sell public shares in more ways then an exchange. An Exchange “listing” is the popular path as it provides a system of support that investors are familiar with. IRC, there were companies that went “public” on their own website in the early 90s which triggered a lot of legal discussions as to whether the “internet” was public enough.

Q: If someone were to transfer their shares into CS to DRS them, and the broker would not be able to locate these shares, is it possible that the broker in this scenario would simply send over money roughly equal to the value of the shares being “transferred,” and that CS would then use this money to buy shares directly from GME’s personal supply of shares, separate from those counted in the float, but not owned by anyone but GME itself. Made_thisforhelp

A: You don’t transfer shares to CS using DRS,  your transferring the shares to yourself and the DRS system is keeping track of it.  CS, on behalf of the issuer as it’s transfer agent, has access to these records when they register as a DRS participant.  In the normal course, no entity can transfer those shares once under your name.  CS is just one of a number of transfer agents that exist but every company has only one and they all help issuers manage the relationship with their shareholders. It is possible that computershare works with affiliated brokers who provide such a function.

Q: How are we sure that DTCC really does remove the shares from being available for shorting etc. after DRS? Is there any supervision over the overall amount of shares (DRS + DTCC/CEDE&Co. = Outstanding Shares)? What systems are used for this share tracking? Neoquant

A: Once the shares are in DRS registered in the shareholder’s name  – they cannot be used for loans.  I am not aware of any specific supervision but if the DTCC rulebook has a rule around it – then the SEC would be their regulating body.

Q: Can I remain the direct registered owner of my shares with the transfer agent, but release custody to a broker of my choice to allow easier selling? Michaellargent

A: When you register shares in DRS – they are in your name. The transfer agent has access to that information within their responsibility to the issuer as its transfer agent. Only the beneficial owner can permission the transfer of shares to a broker.

Q: Is it possible to explain what a hypothetical event timeline would look like as a stock approaches critical percentages of DRS’d shares. Are we going to see notices by the NYSE, or the clearing houses, or is a certain percentage qualify as a material event that the company has to report ? Possible ETF de-listing due to lack of liquidity? Are we going to see any differences in certain stock-metrics ? Are there any internal communications that are likely happening within gov bodies and that we could make FOIA requests for ? Generally I’m looking for a model of how this could play out so we can recognize the signs and act accordingly. Cheers wellmanneredsquirrel

A: There have been occurrences going back to the early 1900s where an individual investor has attempted, and in some cases succeeded, to own all the public float. In a modern sense – we can look at the characteristics of a  private company to help imagine what that that could look like today. Private companies have low shareholder turnover, are significantly less liquid and less transparent . Not advocating for one or the other – but the tradeoffs certainly differ.  Hypothetically, we may have a highly transparent public company where it is difficult to find buyers/sellers – this is how we arrived to our current system of “brokers” and “dealers”.

Q: I would be interested in knowing how the short interest open positions – be it hiding in equity total return swaps, options derivatives, etc – are affected when DRSing stocks. Does removing shares from DTC via DRS have any loopholes that allows short institutions a way to wiggle free of responsibility for and ownership of delivering synthetic shares? TangoWithTheRango

A: This is a great question. Regulation SHO has allowed “wiggle” room as exceptions. I am unaware of  whether these exceptions are exploited for benefits beyond the scope of the rules as is i have not see any studies or reviews of the effectiveness of the rule. A recent example that highlights some of the issues is Dole Foods, where they found out they had more votes then shares when the company was seeking to go private. 

Q: Also, what are actions that will be taken by all players involved when/if all outstanding shares are DRS? Dr Trimbath mentions CMKM and how brokers simply deleted long positions they held on the books once all shares were pulled from DTC.. is this likely to happen here? TangoWithTheRango_

A: I am not familiar with CMKM.  FINRA would likely have something to say to brokers who “simply delete long positions”.

Q: Let’s say a company subject to naked shorting were to take legal action to prove the existence of those shorts, after being notified that their entire float is directly registered. Other investors can, presumably, no longer DRS at that point. But if any investors possessing directly registered shares were to sell them afterward, could investors without directly registered shares at that time have DRS requests granted? Wolfguarde_

A: Naked shorting is illegal and is the reason why we have Regulation SHO. Hypothetically no. If the total distributed shares = the number of shares in DRS – then you there should not be any more shares to register. A company could reach out all brokers and ask for a shareholder list to check. There is a specific process/form for this that i can’t recall at this moment.

Q: On a scale of 1 to 69, how excited is your friend about GME’s future and its impact on the broader investment landscape. wellmanneredsquirrel

A: GME is one of many similar events that have occurred in the past.  My reasons for answering questions here is because of the impact you already have had on the broader investment landscape.  When you purchase shares of a company, you join a group of stakeholders that includes the employees of the company – If the integrity of that system comes into question, i would want stakeholders to step up and begin to test their rights and understanding rather then assume that everything is fine.  The outcome of such activity would benefit more then shareholders.

Q: Does DRS affect liquidity of the real shares held at DTCC or does it theoretically affect the FTDs first before the real shares are pulled out? What is the sequence of actions that DTCC takes when a transfer agent requests these shares? Justwannabeatmarket

A: Transfer agents do not request shares. On behalf of the issuer – transfer agents are able to access the information that is tracked at the DTCC.  In the case of DRS, transfer agents have to request permission from the DTCC to access records in DRS. 

Q: Are there any standards for DRS transfers like there are for FOP/ACAT transfers? As it seems the fees and transfer timelines vary greatly from brokers within the same country. Bibic-Jr

A: There are standards. I feel the awareness of the existence of DRS is very low and while DRS was an effort to the solve the paper tracking it feels like there is still a lot of paperwork involved to move in and out of it.

Q: Why is it that ComputerShare US can only accept DRS transfers, and not other kinds of transfer systems such as ACAT? Bibic-Jr

A: Appears to be some confusion on the role of transfer agents.  Transfer agents work on behalf of the issuer to maintain records of the security holder, issue new stocks, distribute dividends.  A transfer agent would need to establish a relationship with DRS to track ownership. ACAT is a system for and between brokers. Transfer agents must become participants of DRS to gain access to the information. Nothing is transferred to the transfer agent. DRS keeps track of all shareholders who register shares in their name and transfer agents collect that information and track it on behalf of the issuer.

Q: Is the DRS transfer system the only way to withdraw US shares from Cede & Co? Are there any other ways to register a share in your own name? Bibic-Jr

A: To my knowledge, you could also ask for the actual stock certificate in paper form.

Q: Hypothetical: A company is heavily shorted (or hedged with options that exceed the entire amount of issued shares). Basically Market Makers keep selling naked short “for liquidity”. Eventually over a long time, the total number of shares issued by this awesome company is 100% direct registered to actual people. The DTCC or Cede has zero shares. Synthetic shares at brokers are abundant and obvious now right. Is it even possible for options markets to function like this? How can any Market Maker “provide liquidity” when every share is locked up as direct registered? There is no possibility for “expectation to locate”. Because a bunch of apes tossed all the shares in the infinity pool. ihas_prehensile_tail

A: Regulation SHO has an exemption for registered market makers  that does not obligate them to locate shares. As noted in an earlier question there is “wiggle” room for brokers as well. 

Appreciate all the r/Superstonk mods that helped put the above together.