DRS Your GME AnimorphFan1996 • 4 months ago • 90%

Consider this screenshot of a meme from Roaring Kitty. It comes from time 33:25 in the video compilation of his memes [0]. Notice the cartoon character Goofy inserted into the live action film. The detective is deep in thought while staring at Goofy. Then the detective drops his coffee mug –– shattering it on the floor. This is a reference to a moderator of r/walltreetbets. He posted a photo from a Christmas party at Walt Disney World exclusively for Citadel employees. The implication being that this moderator is a Citadel employee at the party [1] [2]. r/superstonk reposts the photo, and riot of posts ensues. Mods must have been out for Christmas. Maybe also at the Citadel party? And then the next day, every post and every comment on this topic is deleted. “This content is not appropriate.” I confirmed on reveddit at the time. Later the moderator at the Citadel party claimed that he was not a Citadel employee –– but rather a Walt Disney World employee playing Goofy at the party. [0] https://x.com/roaringpika/status/1792256419544055876 [1] https://lemmy.world/comment/5020083 [2] https://x.com/john55144586/status/1602405226614558728

DRS Your GME AnimorphFan1996 • 4 months ago • 92%

“Roaring Kitty, once I decided to follow you, you promised to walk with me all the way. But during the most troublesome times, there is only one set of footprints. When I needed you most, why did you leave me?” “My precious child, during your times of trial and suffering, when you see only one set of footprints, it was then that I carried you.” (original content)

DRS Your GME AnimorphFan1996 • 4 months ago • 93%

In this tweet from @TheRoaringKitty [0], a pizza is repeatedly sliced into thinner and thinner slices. This is a reference to the reply from New York Federal Reserve to the Clearing and Legal Certainty Group from the European Commission [1]. When you buy stock, you don't actually get stock –– just a security entitlement. This is a pro-rata share of the stock held by the intermediary. When other shareholders DRS, then their security entitlements at the intermediary become real stock at the transfer agent. So the intermediary is left with less and less stock, and your pro rata share gets smaller and smaller. Like the thinner and thinner slices of pizza. [0] https://twitter.com/TheRoaringKitty/status/1790770363627921776 [1] https://archive.org/details/ec-clearing-questionnaire

DRS Your GME AnimorphFan1996 • 5 months ago • 100%

Tennessee House Bill 2806 / Senate Bill 2640 amends the Uniform Commercial Code to: - Move the jurisdiction for security entitlements to Tennessee - Give entitlement holders priority over secured creditors of intermediaries The civil justice subcommittee hearing features testimony from: - David Webb –– author of [The Great Taking](https://thegreattaking.com/) - Don Grande –– private practice attorney - Andy Guggenheim –– Securities Industry and Financial Markets Association - Tim Amos –– uniform law commissioner Andy Guggenheim: "While holding securities in street name is the most common choice for investors, they do have alternatives for holding securities in other ways if they prefer including physical form via stock certificate when that is available by the issuing company." (He won't say the word DRS!) David Webb: "DTCC itself is planning to start up and pre-fund a new central clearing counterparty when one of the existing ones fails. The industry is talking about the very real possibility that major central counterparties will fail." Related Links: - [Bill Text](https://www.capitol.tn.gov/Bills/113/Amend/SA0728.pdf) - [Legislative History](https://wapp.capitol.tn.gov/apps/BillInfo/default.aspx?BillNumber=HB2806) - [Video of the Civil Justice Subcommittee Hearing](https://www.youtube.com/watch?v=ldNdW3_00gI) - [EU Clearing and Settlement Legal Certainty Group Questionnaire](https://archive.org/details/ec-clearing-questionnaire)

DRS Your GME AnimorphFan1996 • 5 months ago • 94%

sandersonclay.com

GameStop’s earnings report: 15 things you might have missed GameStop published their latest form 10-K on March 26, 2024. While the filing date was on March 26, the document date is February 3, 2024. In this article we dive deeper into the filing and highlight some interesting bits you might have missed. You can find the form or read along with us right here! Our merchandise? Collectibles, which included digital asset wallet and NFT marketplace activities On page 2 of the filing GameStop mentions their merchandise, which includes hardware, accessories, software, and collectibles. Under collectibles they mention their collectibles also included the digital asset wallet and the NFT marketplace activities. “However, both activities were wound down in the fourth quarter of 2023.” GameStop refurbishes products and recycles and achieved a reduction in YoY carbon emissions in excess of 10% Also on page 2 there is mention of sustainability. “In 2023 alone, through our U.S. refurbishment center, we refurbished over 1.1 million software discs and over 3.0 million consumer electronic devices, and recycled over 0.6 million pounds of e-waste.” States with the most and least store locations Based on the map, one could say there are more GameStop locations on the east coast of the US and fewer in states that are more distant. GameStop’s competition According to the filing, GameStop says their competitors in the USA (among others) are: - Walmart - Target - Best Buy - Amazon In Europe they are FNAC-Darty, Media Markt-Saturn, Amazon, and major hypermarket chains like Carrefour. In Australia: JB HiFi, Big W, Target, and Amazon. Every region has Amazon as GameStop’s competitor. This goes hand in hand with Chewy going head-to-head with Amazon and GameStop wanting to become an Amazon-killer. Interesting reminder: Matt Furlong, former GameStop CEO was an executive at Amazon. Scholarships GameStop says they have provided more than $800,000 in scholarships, as per page 5. Holiday season can have a big impact on financial results On page 7, under the RISK FACTORS item, GameStop mentions a potential reason why Q4 2023 revenue was less than expected. “Our business, like that of many retailers, is seasonal, with a major portion of our sales and operating profit realized during the fourth quarter of fiscal 2023. (…) Any adverse trend in sales during the holiday selling season could lower our results of operations for the fourth quarter and the entire fiscal year and adversely impact our liquidity.” Risks related to their common stock include some interesting things Starting on page 12, GameStop lists risks related to their common stock. Some notable parts: - “Short squeezes”. “A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze. A short squeeze has previously led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our Class A Common Stock necessary to cover their short positions, the price of our Class A Common Stock may rapidly decline. Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment.” - Comments by analysts, blogs, articles, message boards, and social and other media. - Large stockholders exiting their position or an increase or decrease in the short interest. - Actual or anticipated fluctuations in our financial and operating results. - Acquisition costs and the integration of companies we acquire or invest in. - The costs associated with the exit of unprofitable markets, businesses or stores. - Some interesting aspects, which are thoroughly known by GameStop’s retail investors. 2024 has the most amount of store leases expiring At total of 1,350 lease terms will expire in fiscal 2024. This offers flexibility for extension or relocation. Size of offices and distribution facilities Office and distribution facilities total an approximate of 2 million square feet, which is the size of this: Or almost as big as Grand Central Station. Does not anticipate a dividend Written on page 17, GameStop says “During the past four fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our Class A Common Stock.” Simplified stock chart on page 17 Thanks GameStop, this is sure to raise questions when asking unknowing traders and investors what that big spike in 2021 was! GameStop also provides a convenient table to see how the stock’s price has fared against the general market: GameStop mentions the market price of its stock has been extremely volatile due to circumstances, including a short squeeze “As noted above under the heading “Risk Factors — Risk Related to Our Common Stock”, the market price of our Class A Common Stock has been extremely volatile due to circumstances outside of our control, including a short squeeze that led to volatile price movements that were unrelated or disproportionate to our operating performance.” (Page 18) Cash on hand is actually $921.7 million Though in total, GameStop has control over more than $1.1 billion and $475.7 of available borrowing capacity under their revolving credit facilities, but that 1.1 billion includes marketable securities of $277.6 million. GameStop mentions this on page 22. The only remaining debt is $28.5 million and consists of six separate unsecured term loans They are held by Micromania SAS, the French subsidiary of GameStop. The total amount was €40 million (just over $42 million) in fiscal 2021. You can find it on page 22. Advertising expenses decreased a lot “Advertising expenses for fiscal 2023, 2022 and 2021 totaled $39.3 million, $75.0 million and $93.6 million, respectively.” This is stated on page 44. We might have easily missed more interesting or important information. That’s no surprise, seeing as how big reports can be. Which things you read in the 10-K were the most surprising or interesting to you? Let us know in a comment!

DRS Your GME AnimorphFan1996 • 6 months ago • 100%

This rule change (approved by the SEC) prevents issuers (such as GameStop) from withdrawing their shares from the DTC. > Recently a number of issuers of securities have independently requested that DTC withdraw from the depository all securities issued by them. > As explained in further detail by many of the commenters opposing DTC's proposal, the issuers making these requests have alleged that their securities have been the target of manipulative short sellers. > DTC's proposed rule change provides that upon receipt of a withdrawal request from an issuer, DTC will take the following actions: > > (1) DTC will issue an Important Notice notifying its participants of the receipt of the withdrawal request from the issuer and reminding participants that they can utilize DTC's withdrawal procedures if they wish to withdraw their securities from DTC; and > > (2) DTC will process withdrawal requests submitted by participants in the ordinary course of business but will not effectuate withdrawals based upon a request from the issuer."

DRS Your GME AnimorphFan1996 • 6 months ago • 83%

knowyourmeme.com

- Wired: [Ryan Cohen is dying.](https://lemmy.whynotdrs.org/post/1126833) - Tired: [GameStop is dying.](https://www.businessinsider.com/gamestop-failing-store-tour-shows-flawed-business-2019-8?op=1) - Expired: [Bitcoin is dying.](https://99bitcoins.com/bitcoin-obituaries/) Explanation of the [Wired / Tired / Expired meme](https://knowyourmeme.com/memes/tired-wired) from Know Your Meme.

DRS Your GME AnimorphFan1996 • 9 months ago • 92%

hdtoday.tv

"Risky Bets" is Episode 1 of the documentary mini-series *Gaming Wall Street*. This post bypasses the HBO Max paywall. "In 2021, an all-out war around GameStop breaks out when a group of internet investors band together to skyrocket the stock price of the flailing video game company –– upending Wall Street in the process." - [*Gaming Wall Street: This Game Has a Dark Side* (official website)](https://gamingwallstreet.org/) - [*Gaming Wall Street* on Wikipedia](https://en.wikipedia.org/wiki/Gaming_Wall_Street) - [*Gaming Wall Street* Episode List on IMDb](https://www.imdb.com/title/tt18332840/episodes/) - ["I naked short sold stocks every single day." (video clip)](https://lemmy.whynotdrs.org/post/197163)

DRS Your GME AnimorphFan1996 • 9 months ago • 100%

upsidechronicles.com

**Gamestop’s data reporting ‘idiosyncrasies’ warrant a closer look** BY JACK TAZMAN DECEMBER 2, 2021 Data anomalies flagged by GameStop investors have required corrective action representing over 350 million GameStop shares. Say what you want about GameStop’s loyal individual investor base, they are definitely keeping a close eye on things. Every SEC filing, every court case, every job board, every news release, every GitHub update – any bit of information that has to do with their favorite stock is quickly detected and discussed by the colossal following in various GameStop-oriented subreddits. They aren’t the only ones tirelessly checking the forums for new information. Topics that gain traction in the individual investor community often find their way into headlines of mainstream media sites including Motley Fool, MarketWatch, Investor’s Place, CNBC, and others. How strange then that the very community these publications depict as reckless, mindless hype followers is one that they depend on for news. For almost a year now, mainstream financial publications publish several articles per week with news and updates plucked straight from GameStop stockholder community. Even more perplexingly, these institutional publications’ articles only address these topics to dismiss them as invalid without providing any real basis for doing so. Most recently, the GME investor base discovered something in Fidelity’s data that raised questions. The response by the media was revealing to say the least. It falls in line with an alarming trend of massive GameStop glitches in data reporting. **Fidelity’s GameStop glitch: Shares available to borrow** On Monday, November 29, 2021, the top post across several GameStop-focused subreddits centered around the number of shares stockbroker Fidelity listed as ‘available to borrow.’ Stock brokers lend their account holders shares out to short sellers who in turn use them to artificially distort supply-demand dynamics with the goal of driving stock prices down. Short selling has been at the center of the GameStop saga since long before it caught significant traction with retail investors in late 2020. Fidelity had mistakenly listed 13,767,545 GameStop shares as available to borrow to short sellers. That figure represents more than 20% of GameStop’s total issued shares. Fidelity is just one broker. Interactive Brokers, for example, listed 500,000 of their account holders’ shares as ‘available to borrow’ that day as well. Almost fourteen million shares is significantly above Fidelity’s average range of lendable GameStop shares, which hovered between one to three million shares for most of 2021. GameStop shareholders had a very reasonable question: Where did Fidelity get these millions of extra shares, which the broker itself labels as ‘hard to borrow’? **MarketWatch, the Wall Street megaphone** True to form, the financial media responded to what they had read in GameStop-centered subreddits like r/Superstonk and r/GME about the Fidelity lendable shares. MarketWatch writer Thornton McEnery writes that it was “pretty cringey to see that a growing band of retail Apes spent much of Tuesday morning ignoring the macro bloodbath across indexes and combing through what they thought looked like a fishy discrepancy on Fidelity’s platform, regarding GameStop,” in an opinion piece published eight hours after the topic rose to the top of GameStop-oriented subreddits. He then goes on to quote then ridicule various Redditor comments and points of discussion on the matter. The irony, hypocrisy, and cringiness of the piece must have been lost on McEnery. Additionally, McEnery is dismissive of the $2.2 billion, 11 million share discrepancy the GameStop shareholders flagged, describing it as “what they thought looked like a fishy discrepancy.” He goes on to clear the air with the satisfying and purely speculative explanation: It might have just been a harmless case of someone “fat-fingers a keystroke and few zeroes get added.” He goes on to say that it “happens all the time, even in the highest echelons of finance.” Apparently, individual GameStop investors questioning a 20%-of-the-float error as something that warranted an explanation seemed amateurish and beneath McEnery to offer any real information on. Nothing says quality reporting like describing a $2.2 billion data discrepancy as an “oopsie,” then redirecting the narrative to discrediting the people who discovered the discrepancy in the first place. **Fidelity responds** But in case MarketWatch‘s explanation left something to be desired for GameStop shareholders – or anyone with a preference for meaningful financial reporting and accountability – Fidelity would eventually respond to the numerous inquiries regarding the mysterious 11 million GameStop shares listed as available to borrow. However, it was less of an explanation insomuch as it was a recap of events followed by a shift of blame for the glitch that represents about 13% of GameStop’s total market cap. According to a response written by Scott Ignall, Fidelity’s Head of Retail Brokerage, the cause of the 11 million share “data anomaly” was that “one of [Fidelity’s] counter-parties provided an erroneous number for GME.” In another post about the GameStop data glitch, Fidelity’s official response notes “…that error caused the number of short-able shares to be overestimated by approximately 11,000,000.” That’s a pretty big overestimation! So it wasn’t “what they thought looked like a fishy discrepancy” after all. It was a bona fide, massive, $2.2 billion GameStop glitch that was only corrected after GameStop individual investors noticed it and raised the issue with Fidelity. Moreover, it was yet another glitch that benefited short sellers and brokers and hurt real GameStop investors, as all GameStop glitches curiously do. Outraged GameStop individual investors pressed Fidelity for more information. Fidelity later posted the following reply to their subreddit: "We have researched the issue with our lending services. In looking into the issue, it was found that one of the counterparties that may provide us shares to short had entered an incorrect number of shares available to short. That error caused the number of shortable shares to be overestimated by approximately 11,000,000. We have rectified the issue and the trade ticket should reflect the correct amount of shares that maybe available to short, which is approximately 2 million." –– u/fidelityinvestments In another response post from Fidelity, the company said: “After researching the volume with our lending services team, we were able to identify that the root cause was an incorrect entry of the number of shares available to short by one of our external counterparties. the issue was fixed by 12:10pm et today. the gme shares available to short is now correct on the trade ticket.” –– Fidelity response to GameStop glitch Interestingly, that day, the stock had been in a steady decline until precisely 12:10 p.m., at which point the stock bottomed out, the reversed trend, regained all the losses up through 12:10 p.m., and ended the day up 1.15%. **GameStop glitches are frequent and large** MarketWatch's coverage of the Fidelity fiasco is right in one regard. When it comes to GameStop, these types of data discrepancies – or “oopsies” – do indeed happen “all the time.” But where MarketWatch is wrong is that these glitches are frivolous and investors should pay no mind. To better understand why GameStop shareholders are so committed to their ongoing due diligence and thesis about the stock, context is key. Monday’s Fidelity fiasco was hardly the first massive discrepancy investors discovered in GameStop stock trading activity. In fact, it wasn’t even the third largest by share volume. There were two other well-documented “glitches” involving large volumes of GameStop stock appearing in the data. Despite being brought to the attention and indeed, corrected by various data providers and brokers, none has been able to provide a satisfactory explanation as to why the discrepancy occurred in the first place. **One million deep out-of-the-money GameStop puts in the Bloomberg Terminal, July 2021** Back in late July, another major GameStop glitch was observed by individual investors. This time, it was first noticed in a Bloomberg Terminal. Two Brazilian hedge funds, Constansia Investimentos and Kapitalo Investimentos, popped up for the first time in the Terminal’s GameStop options data on July 28, 2021. Both firms were an holding exceptionally high volume of put options contracts (put options contracts bet the stock price will go down) on GameStop stock. Between the two of them, they held almost 1.1 million put option contracts. To put that in to perspective, one option contract represents 100 shares. Those 1.1 million contracts represent 110 million GameStop shares – 143% of the total number of GameStop shares in existence. But by the next trading day, July 29, 2021, both firms and their massive put positions were gone from the Terminal. However, also on July 29, 2021, a new name popped up in the Terminal data on GameStop’s option chain. This newcomer also carried a massive put position: 540,000 contracts. Like the Brazilian firms, this GME options-chain guest star would only stay in the Bloomberg Terminal for one day. By July 30, 2021, they too had vanished. That stealthy one-day appearance that immediately followed the Brazilian firms cameos was none other than Credit Suisse – the very neutral champions of financial discretion and privacy. The three firms, holding over 1.6 million put contracts representing more than double the total GameStop shares oustanding, came and went in a 48-hour time frame. **One GameStop individual investor’s due diligence** One inquisitive investor did what many investors once thought the financial media might do. They looked into it. Redditor u/lawsondt emailed the Bloomberg Terminal support team about the one-day cameo firms and the massive GameStop put positions they held. In their initial outreach to the Bloomberg support team, the Redditor notes several peculiarities, as well as some strange commonalities, the three fruit-fly firms had. Firstly, all three firms carried massive GameStop put positions. Secondly, they were the only three institutional put holders that reported strike prices and expiration dates on their put positions. Additionally, all three only appeared in the Bloomberg terminal for one day. “Can you please explain what happened with the GME put positions on July 28 and July 31, 2021?” u/lawsondt writes to Bloomberg’s support team after outlining what they’d witnessed in the Terminal. “The ownership of those GameStop options by those Brazilian funds was a bug and has been addressed,” a Bloomberg Portfolios Data Team representative responds, later adding: “None of those puts should have been displayed as they were not puts on GME…Those 540,000 puts [Credit Suisse’s holdings] were not supposed to reference GME and be on this page in the first place, so they were removed. This issue was isolated to GME.” While the Bloomberg representative explains how Terminal data is collected, the explanation doesn’t address how three different firms holding hundreds of thousands of GME put positions would briefly and erroneously register in the data. The Bloomberg bug, Fidelity fiasco, and MarketWatch‘s ‘oopsies’ are insufficient explanations for the GameStop glitches that leave much to be desired, raising more questions than answers. The trend appears to be: GameStop investors discover these glitches and raise concern, the numbers are quickly “corrected,” and no meaningful explanation is given. Whenever GameStop individual investors press for answers, they are routinely delayed for time, given fluff answers, and passed around company representatives. Despite Fidelity and Bloomberg reactively making massive corrections – representing more than double GameStop’s total shares outstanding between them – the financial media either doesn’t report on it at all, or portrays individual investors as mistaken and reactionary in their findings. But as Upside Chronicles recently learned, this would not be the last of u/lawsondt’s correspondence with the Bloomberg support team, nor of GameStop’s chronic ‘data glitch’ problems. **Yahoo! Finance GameStop Glitch, September 10, 2021 – September 13, 2021** On September 12, 2021, a commotion broke through GameStop subreddits. Another massive discrepancy had been discovered and confirmed by numerous GameStop individual investors on Reddit. This would be the biggest GameStop glitch reported to date. That Sunday night, Yahoo Finance! reported total shares outstanding for GameStop as 249.51 million shares. According to GameStop’s most recent 10-Q filing, the company has only ever officially issued 76.49 million shares. Yahoo! Finance’s data was over-reporting the shares outstanding by 226%. Short selling adds artificial (borrowed) shares into circulation. It stands to reason then, that the additional 173 million shares over the company’s shares outstanding were borrowed shares in circulation – short positions. **Shifts in GameStop’s option chain** Upside Chronicles obtained historical options chain data for the Friday before and Monday after the Yahoo! Finance glitch was discovered. On Friday, September 10, 2021, the total open interest (all strike prices, all expirations) for GameStop call contracts was 298,063. Total open interest on puts at opening was 568,900. By closing on that day, the open interest call-put numbers stayed exactly the same. By opening of the next trading day, Monday, September 13, 2021, total open interest on calls had skyrocketed to 529,089. Total open interest on put contracts had dropped to 529,058. At market open that Monday, the total open interest for call and put contract were almost one to one. Yahoo! Finance’s data was corrected to a much more “in line” float of 61.2 million. By the end of Monday’s trading session, there were 768,774 open interest call contracts on the GameStop options chain – a 257% increase in calls across the entire chain within one trading day. **Another GameStop glitch in the Bloomberg terminal** That weekend, u/lawsondt was looking at Bloomberg Terminal data on GameStop options. And once again, they noticed something. They resume correspondence with Bloomberg’s support team. “More put options appeared than disappeared over the last 24 hours for GameStop stock,” u/lawsondt writes. “…In full disclosure, there have been several SEC complaints filed alleging illegal options for $GME stock used to reset Reg SHO Close-Out Obligations as described by the SEC on August 9, 2013.” Five business days later, he got a response. Bloomberg would change the representative looking into the matter. From that point on, Bloomberg only responds to u/lawsondt’s follow ups with requests for more time. By October 1st, they still had not provided an answer. Full correspondence here. **GameStop glitch: Totals and timelines** Between the Fidelity fiasco, the Bloomberg Terminal “bug,” and the Yahoo! Finance data glitch, the leading finance industry data providers have corrected errors that reflect a total of 351 million GameStop shares – more than 450% of the total GameStop shares in existence. At GameStop’s current trading value (approximately $180), the total sum of “oopsies” and “bugs” amounts to more than $63 billion worth of data glitches relating to GameStop stock in the last four months alone. GameStop investors are right to raise concern and continue their due diligence, as all investors should in anything they are invested in. Ultimately, these were not “what they thought looked like a fishy discrepancy.” On the contrary, what GameStop investors have discovered multiple, concrete, data-backed fishy discrepancies that required corrective action by Bloomberg, Yahoo! Finance, and Fidelity once GameStop individual investors asked about them. **Of concern to all investors** Glitches of this magnitude aren’t just the concern of GameStop investors – they should be of concern to all investors, especially if as MarketWatch states, “it happens all the time.” How can anyone trust the markets and those that run them with this level of “error” occurring being the best-case scenario? Why is it that these errors seem to always be one-sided? Were they truly snafus, it would stand to reason that every now and again, they would happen in a way that favors GameStop’s real investor base – not consistently for the short sellers trying to erode the value of the company. Dark pool activity has increased by 400% over historical averages beginning in 2021. Share volume trading hands exploded around the same time. The average number of shares traded per quarter in 2020 was about 70 billion. Starting in Q1 of 2021, that number skyrocketed to approximately 500 billion shares per quarter – a seven fold increase, according to FINRA data. That means that GameStop individual investors have been and will remain at significant information disadvantage as Wall Street pulls more and more trading activity into obfuscation. [See Upside Chronicles' dark pool report here.] The level of secrecy in the so-called public markets is alarming. Markets needs more accountability and transparency. While GameStop investors might be keeping the closest eye on every metric relating to the stock, if it can happen here at this magnitude, it can happen elsewhere to this magnitude. The financial sector seems to have forgotten that these aren’t just numbers on a screen and games – what happens in the market affects real people’s lives, jobs, savings, health, quality of life, and American prosperity at large. The market needs more watchdog groups like the GameStop individual investor base, not less of them. That the groups responsible for investigating illegal activity in the markets – the SEC and financial press – have either ignored these issues or worse, ridiculed those doing their jobs for them, should be enough for any investor with any semblance of faith left in American financial markets to pull the fire alarm. Where the GameStop saga will go from here remains to be seen. But one thing does seem certain: It’s not over yet. **Jack Tazman** Jack Tazman is a Baltimore, Maryland native. He attended Washington University where he studied political science. Since then, he worked as a writer for various national news organizations specializing in politics and policy. He now resides in New York City as a freelance writer and political consultant.

DRS Your GME AnimorphFan1996 • 9 months ago • 95%

I came across the article ["Bill Ackman Surrenders in His Five-Year War Against Herbalife"](https://www.wsj.com/articles/bill-ackman-surrenders-his-in-five-year-war-against-herbalife-1519854456) in the Wall Street Journal. The hedge fund Pershing Square Capital Management led by Bill Ackman short sold the multi-level marketing and dietary supplement corporation Herbalife. Bill Ackman argued that Herbalife was a pyramid scheme, and its stock price would go to zero. Activist investor Carl Icahn of Icahn Enterprises invested in Herbalife –– becoming its biggest shareholder. Short seller versus activist investor. A live television shouting match between Ackman and Icahn. Compare to the GameStop short squeeze. GameStop CEO Ryan Cohen has even been connected with Carl Icahn (["Ryan Cohen and Carl Icahn Meetup Energizes GameStop Bulls Amid Yet Another Bear Market Rally"](https://wccftech.com/ryan-cohen-and-carl-icahn-meetup-energizes-gamestop-bulls-amid-yet-another-bear-market-rally/)). Netflix produced a full-length documentary against Herbalife. And GameStop inspired multiple films –– notably including [Dumb Money](https://www.dumbmoney.movie/) (for the bulls) and and [This Is Financial Advice](https://www.youtube.com/watch?v=5pYeoZaoWrA) (for the bears). The FBI and federal prosecutors investigated Ackman for market manipulation (["Prosecutors Interview People Tied to Ackman in Probe of Potential Herbalife Manipulation"](https://www.wsj.com/articles/prosecutors-interview-people-tied-to-ackman-in-probe-of-potential-herbalife-manipulation-1426196822)). And the SEC similarly investigated Ryan Cohen (["Ryan Cohen Said To Be Under SEC Scanner Over His 'Sketchy' Bed Bath & Beyond Trades"](https://www.benzinga.com/news/23/09/34354521/ryan-cohen-said-to-be-under-sec-scanner-over-his-sketchy-bed-bath-beyond-trades)). After five years, Ackman apparently exited his position –– losing hundreds of millions of dollars. Supposedly, GameStop short sellers also closed their positions (["Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position"](https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-melvin-capital-closed-out-of-gamestop-short-position-tuesday.html)). The book [When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle](https://www.bizjournals.com/newyork/news/2018/04/26/book-chronicles-ackman-icahn-herbalife-rivalry.html) by Scott Wapner describes the Herbalife story. [The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees](https://www.hachettebookgroup.com/titles/ben-mezrich/the-antisocial-network/9781538707555/) by Ben Mezrich describes the GameStop story.

DRS Your GME AnimorphFan1996 • 9 months ago • 94%

www.youtube.com

Related Videos: * [The Apes and Wall Street](https://lemmy.whynotdrs.org/post/340778) * [How Redditors Exposed the Stock Market](https://lemmy.whynotdrs.org/post/310203)

DRS Your GME AnimorphFan1996 • 9 months ago • 94%

www.youtube.com

In particular, listen to the section "Direct shareholdings vs. direct stock purchase plans" at 6:59. For related videos, please see ["Paul Conn - AMAs, Appearances, and Transcripts"](https://lemmy.whynotdrs.org/post/73298) posted by [@Chives](https://lemmy.whynotdrs.org/u/Chives) four months ago.

DRS Your GME AnimorphFan1996 • 10 months ago • 58%

youtu.be

This episode of the [Bankless podcast](https://www.bankless.com/) about crypto games reminded me of the [GameStop NFT Beta](https://nft.gamestop.com/) because it shows the potential for gaming to go beyond brick and mortar. See also the post ["Protocol: Gemini - BLACKPAPER 2.0"](https://lemmy.whynotdrs.org/post/474001) by [@jersan](https://lemmy.whynotdrs.org/u/jersan) about crypto gaming in augmented reality. And the article ["Overstock Short Sellers Fall Short as Judge Gives Digital Dividend Claims Short Shrift"](https://www.coindesk.com/markets/2020/09/29/overstock-short-sellers-fall-short-as-judge-gives-digital-dividend-claims-short-shrift/) about how Bed Bath & Beyond (then Overstock) used a crypto dividend to mitigate short selling. - 00:00:00 Intro - 00:04:45 Intro To Crypto Gaming - 00:11:26 How Has Crypto Gaming Evolved? - 00:15:05 Casual Vs AAA Games - 00:18:37 The Current Gaming Experience - 00:23:26 What Benefits Come From Blockchain? - 00:30:13 Best Argument Against Crypto Gaming? - 00:40:20 How Far Can This Go? - 00:45:38 iOS and Taxes - 00:50:02 Dealing With Regulators - 00:53:52 Choosing a Chain - 00:59:41 Are Traditional Studios Coming? - 01:02:18 What's An On-Chain Game? - 01:07:11 Blockspace - 01:13:49 Can This Pump Our Assets? - 01:16:35 Closings and Disclaimers []() []()

DRS Your GME AnimorphFan1996 • 10 months ago • 94%

www.yalelawjournal.org

"Subsection II.B. The Paperwork Crisis and the Birth of the NSCC and DTC" (pages 127 - 131) relates to ["Taking Stock, Episode 14: The Birth of the DTC"](https://lemmy.whynotdrs.org/post/467096). "When we think of securities markets, we imagine crowded trading floors, electronic trading screens, brash cable-news hosts, and titans of industry ringing the opening bell at the New York Stock Exchange (NYSE). But the institutions that really move money on Wall Street reside around the corner –– quite literally –– at 55 Water Street. This is the home of DTCC and its twin subsidiaries, NSCC and DTC. Today, NSCC is America's only securities clearinghouse, and DTC its only securities depository." (pages 122 - 123) "NSCC guarantees that funds will be delivered to the seller and that purchased securities will be delivered to the buyer. If a counterparty defaults, NSCC will first use the collateral that the defaulting party posted as margin against its outstanding obligations. If those funds prove insufficient, NSCC can tap into a dedicated default fund financed by mandatory contributions from market participants as a condition of their membership. NSCC employs similar mechanisms to guarantee the delivery of purchased securities." (page 131) "There is relatively little publicly available information about these regional clearinghouses and depositories. Other than the descriptions that follow, it is not known how they were governed, how much the regional exchanges invested in them, or how much money they made or, more likely, lost." (page 133) "Importantly, the existence of these regional players prompted Congress to list 'competition among ... clearing agencies' as one of the primary goals of the newly created Section 17A." (page 133) "As it encouraged the development of a 'National Market System,' the SEC repeatedly pointed to Congress's desire to facilitate competition among the clearing agencies. On multiple occasions, the SEC even stated that 'clearance and settlement is not a natural monopoly.'" (page 134) "The SEC's emphasis on promoting competition was also reflected in the concerns among market participants and other regulators that NSCC and DTC would abuse their growing market power. In the late 1970s, the SEC received comments from the regional clearinghouses and DOJ's Antitrust Division challenging the SEC's approach to the National Market System on the ground that it was anticompetitive and would open the door for NSCC and DTC to obtain monopolies." (page 134) "Yet, just twenty years after Congress amended the Securities Exchange Act to create the National Market System and only fifteen years after the SEC first granted registration to NSCC, DTC, and other clearing agencies, all the regional players had halted their clearing and depository businesses and transferred their operations to NSCC and DTC." (page 137) "Predictably, once DTCC acquired complete control over U.S. securities clearing and depository markets, evidence began to emerge that it might have been abusing its dominant position." (page 155) "They did so by imposing high fixed costs to connect to the new market infrastructure, by allowing NSCC and DTC to dictate the direction and pace of innovation, and by preventing the regional players from differentiating their products and services from those of their larger competitors." (page 138) "The NYSE, Amex, and NASD appear to have used this position to advance their broader business interests. For example, in 2006, DTC proposed a rule that made it extremely difficult for nonmember transfer agents, regional exchanges, and brokers that were not members of the NASD to hold securities recorded on DTC's book-entry system." (pages 155 - 156) "In effect, the proposed rule, which the SEC approved in amended form, forced these firms to choose between opening an account with DTC, creating their own infrastructure for electronically recording securities ownership, or simply exiting the marketplace." (page 156) "This bleak calculus prompted at least one competitor to object that DTC was 'seeking to become a de facto regulator of the entire transfer agent industry' and to argue that DTC was using its position as 'a monopoly [to] engage[] in predatory, anti-competitive conduct with respect to its direct competitors.'" (page 156) Awrey, D., & Macey, J. C. (2022). Open access, interoperability, and DTCC’s unexpected path to monopoly. Yale Law Journal, 132(1), 96–170.

DRS Your GME AnimorphFan1996 • 10 months ago • 92%

Please see the attached image. "Only two out of twenty tokens have correlations beneath this threshold, namely McDonald's Corporation and Gamestop Corporation with respective correlation coefficients of 0,79 and 0,93." Buyse, J. (2021). Impact assessment of digital assets on securities markets [Universiteit Gent]. https://libstore.ugent.be/fulltxt/RUG01/003/010/051/RUG01-003010051_2021_0001_AC.pdf

DRS Your GME AnimorphFan1996 • 10 months ago • 85%

I am continuing with [the project to edit Wikipedia articles about GameStop and DRS](https://lemmy.whynotdrs.org/post/300439). I expect that this will take both vigilance and good citations. For example, in the article [Cede and Company](https://en.wikipedia.org/wiki/Cede_and_Company), I wrote, "Appropriately, the word 'cede' means to 'give up (power or territory)' because investors give up their stock and companies give up their shareholders to an intermediary." I cited ["Rise and effects of the indirect holding system system: How corporate America ceded its shareholders to intermediaries"](https://lemmy.whynotdrs.org/post/460206). How you can help: - Post ideas of articles to edit - Post citations to [reliable sources](https://en.wikipedia.org/wiki/Wikipedia:Reliable_sources) - [Watch articles](https://en.wikipedia.org/wiki/Help:Watchlist) for deletion of key facts! Challenge: Get the word 'DRS' to stay in the article [GameStop short squeeze](https://en.wikipedia.org/wiki/GameStop_short_squeeze).

DRS Your GME AnimorphFan1996 • 10 months ago • 89%

What if you didn’t have to wait days for trades to clear, pay exorbitant hidden fees to your broker, or worry about holding counterfeit stock? Capital markets work, but they’re incredibly inefficient. A few powerful institutions: - control stock lending and margin, generating fake shares en mass; - systematically disenfranchise global investors from buying stocks; and - through manipulative systems, ultimately cost investors over $3.75T / year. Transfer agents can uproot industry behemoths by undermining their grasp on capital markets. In particular, all brokers are commingled as but a single investor on the books of public companies. Public firms hire a “transfer agent” to maintain these investor records. The stock transfer agent industry has consolidated to four major providers over the past few decades. Service amongst them has dwindled while prices skyrocket. Issuers are not satisfied. Old transfer agents force book-entry stockholders to print complex paperwork, travel to an approved bank, present identification documents, wait for a tedious banker review, snail mail everything, and hope for an unhurried account statement or check back. We think significantly more investors would use transfer agents if their trading experience was digital, streamlined, and came with easy bank connections. This is possible since private stock sales on your own behalf aren’t regulated as stringently as traditional capital markets. Transfer agents haven’t offered a trading interface because old market technology required centralized coordination. Securities laws disallow transfer agents from this. But decentralized ledgers and particularly the Stellar Decentralized Exchange (“SDEX”) let book-entry investors match trades from anywhere with zero middlemen. This is the future of investing. For more information, please see the paper ["Block Transfer."](https://blocktransfer.com/.well-known/yellowpaper.pdf)

DRS Your GME AnimorphFan1996 • 10 months ago • 96%

[Critics of the DRS movement have called us conspiracy theorists, cargo cultists, etc.](https://sh.itjust.works/comment/5864581) Taking this as constructive criticism, I thought I would start posting some relevant scholarly papers. The following paper discusses DRS, Cede and Company, an SEC investigation, the stockholder list, shareholder voting, and the DTCC. The author, David Donald, wrote his dissertation on this topic, so his knowledge is up there with Susanne Trimbath. > The Rise and Effects of the Indirect Holding System: How Corporate America Ceded Its Shareholders to Intermediaries > > David C. Donald > > This paper explains how the choice of the indirect holding system for securities settlement forced U.S. issuers to cede their shareholder data to intermediaries. > > Part I describes the law applicable to the transfer of certificated securities. > > Part II describes how the paper-intensive process of transferring certificated securities led to a market failure in the 1960's. It further shows how the indirect holding system was seen as a temporary, second-best solution pending the dematerialization of shares and improvements in communications technology. In the mean time, the effects of separating beneficial and record ownership led to an expensive and inefficient process of shareholder communication and voting. > > Part III examines this process, whose inefficiency offered service providers the profitable niche industry of assisting issuers to distribute proxy materials through and around extensive chains of intermediaries. > > Part IV explains how, when law and technology had developed sufficiently to allow a return to a system of direct issuer-shareholder relationships via a direct registration system, intermediaries acted rationally to absorb DRS into the DTTC system, and continue to enjoy their central role between issuers and shareholders. This Part also demonstrates how a truly effective direct registration system could provide the transparency necessary to address problems such as "empty" voting and could arguably spread the costs of securities settlement more equitably through broader- based netting, rather than pushing them downstream. > > Part V argues that although the indirect holding system and its negative effects are no longer necessary, a combination of unawareness and interest serves to perpetuate a perceived need for issuers and shareholders to cede their ownership/governance relationship to a custodian utility, which then offers to put them back into contact, for a fee. [Mirror on diyhpl.us](https://diyhpl.us/~bryan/papers2/paperbot/bcd1dfcf9b0f439efc64f7d43389c29a.pdf) [Mirror on publikationen.ub.uni-frankfurt.de](https://publikationen.ub.uni-frankfurt.de/opus4/frontdoor/deliver/index/docId/590/file/ILF_WP_068.pdf) [Mirror or papers.ssrn.com](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017206)

DRS Your GME AnimorphFan1996 • 10 months ago • 84%

deoccupywallst.com

"Wall Street uses money from stocks that regular people have invested in the stock market to hold the 99% down while propping up the 1%. That allows Wall Street to control the media, create division, and hand pick politicians who enforce and create laws that enable Wall Street to widen the wealth gap. The current system is a feedback loop where the more Wall Street takes from you, the more they can fund their ability to take more and more." "There is a solution, however, and that's by having the American public remove their stocks out of Wall Street's name, and put them in their own. This can be done with just a single phone call to your broker (or advisor), but that secret is so well hidden that no one knows about it nor what it's called. It's called the Direct Registration System (DRS), and by registering your stocks in your own name, we can restore the American dream and take back what is rightfully ours from the system that has held us down for decades." For more information, please see the website [De-Occupy Wall Street](https://deoccupywallst.com/).

DRS Your GME AnimorphFan1996 • 11 months ago • 92%

upsidechronicles.com

**Something big is lurking in Wall Street’s dark pools** BY JACK TAZMAN DECEMBER 27, 2022 To the retail investor, dark pool history and current activity is every bit as unsettling as it sounds. The stock market is a place where the public has access to owning a little slice of the American economy by buying fractional ownership of companies. Once a company goes public, their financials and ownership composition are subject to reporting requirements and regulation. …Right? If the above statement sounds reasonably accurate to you, you are probably going to get absolutely steamrolled as a retail investor. When it comes to trading what you don’t know will almost certainly hurt you. Remember that as a rule, complexity and obscurity are the nukes in Wall Street’s arsenal of advantages over retail investors. Wall Street spends top dollar fighting any attempt to bringing transparency to their practices or strongholds on power and control. Upholding this rosy but outdated perception of the market is just one of the many tools in their box. In this continuation of Upside Chronicles‘s Wall Street toolbox of market manipulation, we’re diving into the murky waters of dark pool trading. **What are dark pools?** Dark pools are marketplaces where Wall Street can make trades and execute strategies outside of the public eye. The general public does not have direct access to dark pools, which are also referred to as alternative trading systems (ATS). Those that do have access to their murky waters are able to trade privately and directly with other participants. While dark pool volume is reflected “on the tape,” whether the trade was a buy or sell is not. Dark pools do have some reporting requirements. Every week, the total ATS activity is listed by security on FINRA’s website. However, by the time the data goes public, it is already out of date. Remember, this is coming from the industry that has the infrastructure to check multiple exchanges for prices in nanoseconds and execute billions of trades per day. But when it comes to basic transparency reporting….30-day latency. Retail investor orders often get filled in dark pools through the payment-for-order-flow business model. In the GameStop run up earlier this year, it was revealed that Robinhood was routing its order flow to marker maker Citadel for fulfillment. That means Citadel essentially had exclusivity in processing Robinhood investor orders. The way a healthy public market would work is that all participants – regardless of how deep their pockets – would be able to see the same pre-trade data, also known as the order book. This information is key to calibrating the buy and sell pressure on stocks to determine where their price is heading. That is exactly why it is hidden from public view. **Rule 19c-3: There are no rules for Wall Street** True to their nature, dark pool trading slithered into legal standing through a seemingly innocuous enough, cleverly named ‘Rule 19c-3.’ In the Federal Register entry regarding the adoption of this rule, the SEC (yes, the commission tasked with regulating the markets) referred to it as a ‘limited proposal.’ For all the grandstanding Wall Street does decrying regulation, Rule 19c-3 is one Wall Street never complains about. That’s because it’s not really a ‘rule’ insomuch as an override of regulation pertaining to basic market transparency and fairness. Of course, those rules still apply to everyone else — the more money you have, the more of the full picture you get to see. Prior to the passage of Rule 19c-3, trading in public companies had to be done…well, publicly. Dark pools were illegal between 1933–1978 under the Securities Act of 1933, passed during the Great Depression after the stock market crash of 1929. There was significant opposition to the passage Rule 19c-3, which SEC defines as a ‘regulatory measure.’ Paradoxically, the “rule” actually reverses a real regulatory measure. Pointing out the obvious, the legalization of dark pools for big players would leave small brokerages and retail investors in the dark about what was truly happening in the market. These concerns were overruled in favor of the Commission’s belief that giving big market players exclusive privacy privileges would “limit the expansion of the anticompetitive effects of off-board trading restrictions.” In other words, giving big players exclusive “privacy privileges” makes for a more competitive market. And that’s how dark pools became legal again. **The ‘theoretical’ justification for dark pools** Today, when the obvious advantages dark pools give to big Wall Street players is brought into question, the excuse mill they use to justify them falls into the buckets of: 1. There may be times where large transactions need to be executed privately to avoid rocking the stock price. Their favorite example to give is say, a former CEO with a large holding decides to retire and sell their stake. 2. They need privacy to execute “proprietary trading strategies” (and fraud, too.) Of course, this directly contradicts their defenses of short selling‘s existence. It’s hard to argue that dark pools don’t drain liquidity from the market. Cushioning an insider sell off also interrupts “efficient price discovery.” Perhaps they mean it in the same playful way the word “Rule” is used in “Rule 19c-3.” **Dark pools hide the big picture about a stock’s true price** Dark pools obscure the real price of shares. Any given stock could have massive orders queued up in the order book, away from public view. The prices retail investors see on the ticker tapes running across the screens of CNBC and Yahoo Finance generally aren’t truly reflective of active supply-and-demand pressures. Imagine going to a dealer to buy a truck. When you pull up, you see two trucks in the parking lot. The salesman says these are the only trucks they have in their inventory. The last dealer you visited only had one truck at about the same price. It seems a little expensive, but you go ahead and buy the truck. After the paperwork is signed, you are led to the other side of the building. There, through a crack in massive blackout curtains that cover floor-to-ceiling windows, you see another lot packed with trucks. Moreover, the prices painted on the windows are thousands less than what you just paid. The inventory on the back lot is only available to people in tax brackets much higher than yours. Dark pool trading is a bit like that, except you’ll never see the back lot. The very next day, all the trucks in the back lot are sold for $10,000 less than what you paid. The resale value of your truck falls. Retail investors take note: The price you see on the ticker could very much be – and probably is – an illusion thanks to the SEC’s “regulatory measure,” Rule 19c-3. Much like short selling, dark pools are one of the many ways Wall Street players can manipulate the market and by extension, a large part of the American economy. **GameStop price action reflects dark pool price manipulation** Frustrated retail investors noted that despite months of numerous brokers reporting significantly more buy orders than sell orders, the prices of meme stocks like GameStop would fall. For much of 2021, Fidelity, the largest stock broker in the world, showed significantly more buy orders than sell orders, a trend that was mirrored by other brokers. Yet GME shares would still fall in price on these days. On 8/18/21, Fidelity’s buy-sell ratio on GME was 82% buy, 18% sell. The stock still fell by over 6%. Retail investors suspected buy orders were being handled in dark pools to distort ticker price. Especially considering n this trend repeated itself day after day for months on end. Despite significantly higher demand than supply, the net effect on the price was a downtick. Note: Orders reflect varying amounts of shares. This can happen if the sell orders were significantly larger than buy orders. Additionally, the ratio displayed above only reflects Fidelity’s buy-sell order ratio for the day. **Something is lurking deep in dark pools in 2021** #darkpools and #darkpoolabuse has been trending on Twitter for months. In the eleven quarters leading up to and through Q2 of 2020, the percentage of total shares traded in dark pools averaged around 17%. But Q3 of 2020 saw that figure shoot up to almost 50%. Of course, markets are dynamic, so anomalous spikes and drops happen. Yet Q4 2020 saw the 50% level sustained. Incredibly, instead of floating back down to Earth, it continued to escalate. The first quarter of 2021 saw a jaw dropping 74% of all shares traded handled exchanged in dark pools. In Q2, it headed back in the right direction, but still landed just shy of 70%. More than seventy percent of all shares that changed hands in the stock market at large in 2021 did so in dark pools. If this is the SEC’s idea of a ‘limited proposal’ that combats ‘anticompetitive effects,’ retail investors pinning their hopes to regulatory intervention shouldn’t hold their breath. **Massive volume increase** Interestingly, percentage of shares traded in dark pools isn’t the only thing ramping up. The number of shares traded in the market overall exploded. The ten quarters between Q1 2018 and Q2 2020 collectively averaged approximately 71 billion shares traded per quarter. The second quarter of 2021 saw over 500 billion shares change hands. That’s a 700% increase compared to the historical average, and of those trades, almost 70% was executed in dark pools. What is fueling the frenzied activity that Wall Street tries to frame retail for, (but can’t in this case considering 70% of the activity is happening in Wall Street insider exchanges) is the multi-trillion dollar question. If this doesn’t reflect market manipulation by Wall Street insiders and marker makers, then all securities regulations are about as “strict” as Rule 19c-3. And much like Rule 19c-3 states, the rule is that when it comes to Wall Street, there are no rules. **Clues in trade size** Total volume percent traded in dark pools aren’t the only metrics going bananas. Trade size has been showing some unusual fluctuations that are rapidly breaking from historical trends. A trade can contain one share, a thousand shares, or a million shares. In sync with the other exponential ramps from Q3 2020 onward, the trade size on public markets versus dark pool markets have also escalated. Firstly, the trade sizes on public exchanges have been trending downward. Between Q1 of 2018 and Q2 of 2020, the average size of trades executed on lit exchanges bounced around between the high 180s and low 200s. The cumulative average across that period came in at 196.4. However, starting in Q3 of 2020 onward, there was a sharp decline. For the most recent data reported to FINRA, which spanned the period between 04/02/2021–06/30/2021, the average shares per trade on lit exchanges fell to 152. Over the last four quarters (through 06/30/2021), the cumulative average shares per trade fell to 159.25 – a 19% decline. Strange considering the number of shares changing hands in the market at large was up 700%. But a 19% fluctuation is small potatoes compared to what’s going on in dark pools over the same period. Meanwhile, back in the dark pools, the trend is shifting sharply in the opposite direction. The average dark pool trade size for the ten quarters leading up to Q3 of 2020 clocked in around 7,350. But in Q3 2020, yet another exponential ramp started. The last four quarters’ average weighed in at just shy of 26,000 per trade – a staggering 350% increase. It peaked in Q1 of 2021 — the prime quarter of meme stock chaos — at almost 36,000 shares per trade. **Swim with caution** This year has been a good one for the stock market. As of the time of this writing, the NASDAQ is up almost 18% this year, the S&P 500 has clocked just over 20% gains, and the Dow Jones is up almost 14%. And yet, with a hard majority of the market’s activity hidden from view, something just doesn’t seem right. There must be some impetus for this extreme ramp in the need for discretion and frenzy in behind-the-curtain trading. The question is: What? The truth is, no one can know for sure. Wall Street has built in cover with “regulatory measures” and “limited proposals” that hide more than 70% of the ‘public market’s’ trading activity from view to everyone but them. The best we can do is take the information we do have, knowing that this is what the big players have “let” us know. From there, perhaps a strategic place to start is understanding the depth of what we don’t know. **Jack Tazman** Jack Tazman is a Baltimore, Maryland native. He attended Washington University where he studied political science. Since then, he worked as a writer for various national news organizations specializing in politics and policy. He now resides in New York City as a freelance writer and political consultant.

DRS Your GME AnimorphFan1996 • 11 months ago • 100%

www.youtube.com

One-minute clip from *The Problem with Jon Stewart Podcast*. [Mirror on Invidious](https://vro.omcat.info/watch?v=gy7RpMiRfto) Related: [How Redditors Exposed the Stock Market (2022)](https://lemmy.whynotdrs.org/post/310203)

DRS Your GME AnimorphFan1996 • 11 months ago • 100%

Shower thought: The word 'cede' literally means to give up ownership. We ceded our stock to Cede & Co. They literally own 83% of the stock market. Time to take it back! (Please see the attached image.)

DRS Your GME AnimorphFan1996 • 11 months ago • 90%

www.youtube.com

The highest scoring post on our server is ["Some truth to this, I'd say"](https://lemmy.whynotdrs.org/post/113692) a quote from Jon Stewart posted by [@MoozooZ](https://lemmy.whynotdrs.org/u/MozooZ). I thought that you might also enjoy watching "How Redditors Exposed the Stock Market" from the TV show *The Problem with Jon Stewart*. [Mirror on Invidious](https://invidious.garudalinux.org/watch?v=bP74RBTE8kI)

DRS Your GME AnimorphFan1996 • 11 months ago • 100%

www.youtube.com

[Mirror on Invidious](https://invidious.garudalinux.org/watch?v=6dHDTUQWYr0)

DRS Your GME AnimorphFan1996 • 11 months ago • 95%

GameStop Stock: Don't Count on Ryan Cohen Selling His Shares According to GameStop's new CEO, he will either turn the company around or go down with it. BERNARD ZAMBONIN OCT 4, 2023 5:23 AM EDT Ryan Cohen, GameStop's new CEO, owns about 12.10% of the company's shares and is determined to lead the company to profitability. GameStop has been implementing cost-cutting measures and reducing operating expenses, while Ryan Cohen's personal investment and commitment signal his determination to turn the company around. Ryan Cohen Is GameStop's New CEO It has been quite a journey for Ryan Cohen and GameStop. On September 28, the company's board of directors announced that Cohen had been appointed president and chief executive officer. In their statement, they included the interesting tidbit that Cohen will not receive any salary for taking on this new role. Ryan Cohen, who used to be the CEO of Chewy and is GameStop's largest individual shareholder, owns approximately 12.10% of the company's total shares through his holding company, RC Ventures. Back in 2021, he joined GameStop's board and eventually assumed the position of chairman. More recently, in June of this year, Cohen took on the role of executive chairman following the departure of GameStop's former CEO, Matt Furlong. The Survival Memo In his first communication as CEO, Cohen sent a memo to GameStop employees titled "Survival." In the document, he emphasized the importance of practicing frugality given the challenging situation that GameStop's business currently faces. Cohen wrote: "It is not sustainable for GameStop to operate a money-losing business. The mission is to operate hyper-efficiently and profitably. Our expense structure must allow us to endure any adverse scenario. Whether it's a difficult economy or revenue deceleration from shrinking software, we must be profitable. Our job is to make sure GameStop is here for decades to come. Extreme frugality is required. Every expense at the company must be scrutinized under a microscope and all waste eliminated. The company has no use for delegators and money wasters. I expect everyone to treat company money like their own and lead by example. "Prospering in retail means survival. If we survive, we stay in the game. Survival is avoiding the deadly sins that often lead retailers to self-destruct. This is usually a result of the following — buying bad inventory, using leverage, and running expenses too high. By avoiding these self-inflicted mistakes and focusing on the basics, GameStop can be here for a long time. "I expect everyone to roll up their sleeves and work hard. I'm not getting paid, so I'm either going down with the ship or turning the company around. I much prefer the latter. "It won't be easy. Best of luck to us all." GameStop is on track for its fifth consecutive year without turning a profit. As shown in the table below, the company has consistently maintained high operating expenses, but this hasn't translated into greater efficiency in its retail operations. Ryan Cohen's letter implies that he perceives there are corporate inefficiencies at work here. His memo could serve as a warning to higher-ranking individuals who might fall under the category of "delegators and money wasters." Over the past year, GameStop has reported approximately $1.61 billion in selling, general, and administrative (SG&A) expenses, compared to $1.47 billion in the previous 12 months. Throughout the year, the company has implemented a cost-cutting strategy and closed stores in Europe as part of its efforts to achieve profitability. Since the beginning of the year, GameStop has progressively reduced its SG&A expenses, resulting in significant improvements in its operating income. It's worth noting that GameStop currently maintains a strong cash position, boasting a balance sheet of approximately $1.1 billion and virtually no debt. This financial strength provides the company with an extra cushion — particularly during times when profitability is lacking. While it's important to acknowledge that this financial situation may not be sustainable in the long term, GameStop appears to be relatively stable from a liquidity perspective. This also reduces the likelihood of the company resorting to equity offerings to raise additional cash, which would dilute its float. Putting His Money Where His Mouth Is Ryan Cohen seems to take his motto of putting his money where his mouth is quite seriously. In June of this year, Cohen purchased an additional 443,842 shares at an average price of $22.5 per share, which is approximately 30% above the current share price. This increased his ownership to 1.770 million shares, representing 12.1% of GameStop's total shares. In his recent memo, he emphasized that he is not receiving any compensation for his new role as a company executive, stating, "I'm either going down with the ship or turning the company around." Whether the new CEO will succeed in turning the company around remains to be seen. However, one thing is clear: GameStop shareholders can expect Ryan Cohen to remain committed and not abandon the ship anytime soon. (Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes.) BY BERNARD ZAMBONIN Co-producer of The Street's financial channels: Apple Maven, Amazon Maven and Wall Street Memes. Researcher and operations manager at DM Martins Research.

DRS Your GME AnimorphFan1996 • 11 months ago • 80%

**🚀 Hey, GME Army! Let's Shine the Light on Wikipedia 🚀** How did *you* first hear about the GameStop short squeeze? 🤔 - Scrolling through social media? 📱 - Over a segment on mainstream news? 📺 - Watching one of the many media adaptations? 🎥 - A convo with a buddy? 🗣️ - Somewhere else? 🌐 **Popular Media Adaptations** - **Dumb Money** - Hilarious comedy-drama, based on *The Antisocial Network* 📖 - **The Antisocial Network** - The non-fiction book that led to the movie 🚀 - **Gaming Wall Street** - Eye-opening HBO Max Original miniseries 🍿 - **GameStop: Rise of the Players** & **The Wall Street Conspiracy** - Revealing docu-films 🎬 - And, let's not forget about **This Is Financial Advice** and several other game-changers! 🎞️ **💡 So Why Wikipedia? 💡** When the world hears about GameStop, they immediately head to Wikipedia. Trust me, the traffic spikes around media releases. (Check out the *Pageview Analysis* tool for some wild stats). But, there's a problem: - Articles lean biased *against* GameStop and DRS. 😡 - Essential info is MIA. Did you know the "GameStop short squeeze" page doesn’t even mention DRS? 🤦‍♂️ **📝 Time to Edit! But Where to Start? 📝** - The classics: *GameStop short squeeze*, *GameStop*, *r/wallstreetbets*, and *Robinhood*. - Key players: *Ryan Cohen*, *Keith Gill*, *Melvin Capital*, and more. - Dive deep: Understand terms like *Short squeeze*, *Meme stock*, *Naked short selling*, and many more. - Docs and films: *Dumb Money*, *Gaming Wall Street*, *GameStop: Rise of the Players*... you get the gist. - And don't forget about our meme stock pals: *Butterfly*, *Bed Bath & Beyond*, *AMC Theatres*, *Koss Corporation*, and more. **📸 Photos Make a Difference! 📸** - Hunt online or snap your own. - Remember: Stick to Creative Commons Licensing. **🚫 But Beware Adversaries! 🚫** Celebs and corporations try to curate their articles. Activist short sellers? They’re lurking too. You might face some resistance, but stay strong, and follow the wiki rules. And if you ever find yourself in a debate, remember the talk pages and dispute resolution tools. **📚 WikiStyle! 📚** - Stick to the facts, ensuring *notability*, *accuracy*, and *verifiability*. - Maintain a *neutral point of view*. - Only use *reliable sources* –– Google Scholar can be your best friend. - Archive those sources. - Aim for *featured articles*. **🤝 Join the WikiProjects 🤝** - Collaborate with the *Finance & Investment WikiProject* or the *Internet Culture WikiProject*. - Thought about forming a **GameStop WikiProject**? 🚀 Why not! **✋ Need a Helping Hand? ✋** - For Wikipedia-related queries, there's always help on the platform. - Proud of an edit, or need guidance? Share and ask right here on Lemmy! **💪 Let's do this, GME Army! 💪** Dive into Wikipedia, spread accurate info, and let the world know the truth. We're more than investors; we're historians in the making! 🚀🌕

DRS Your GME AnimorphFan1996 • 11 months ago • 84%

www.youtube.com

[Mirror on Invidious](https://invidious.garudalinux.org/watch?v=Dn8x0W-LsfQ) To the tune of ["Welcome to the Internet"](https://www.youtube.com/watch?v=k1BneeJTDcU) by Bo Burnham.

DRS Your GME AnimorphFan1996 • 11 months ago • 90%

Thinking about the idea of Bed Bath and Beyond closing its stores but continuing on as Butterfly. It reminds me of some other "zombie companies" that continued on after the public perception of their demise. **Blockbuster:** Similar to the expectation that digital downloads would usurp brick-and-mortar GameStop, Netflix DVD-by-mail and streaming service seemingly defeated brick-and-mortar Blockbuster. But famously, one "Last Blockbuster" remains in Bend OR. **Andersen Consulting:** The Enron accounting scandal led the conviction of the Arthur Andersen accounting firm and the surrender of its accounting license. But years later, the Supreme Court reversed the conviction and Arthur Andersen renamed to Omega Management I - IV which owns the Q Conference Center in St. Charles IL. Can you think of any other examples?

DRS Your GME AnimorphFan1996 • 12 months ago • 88%

www.youtube.com

[Mirror on the Internet Archive](https://archive.org/details/wall-street-conspiracy) [Mirror on Invidious](https://invidious.garudalinux.org/watch?v=26_IcexvePA) Consider this documentary as counter-programming to [This Is Financial Advice](https://www.youtube.com/watch?v=5pYeoZaoWrA) ([post](https://lemmy.whynotdrs.org/post/266502) and [re-post](https://lemmy.whynotdrs.org/post/274625)). In 2008, rampant fraud on Wall Street created billions of counterfeit shares in the stock market, bond and futures markets, and the credit default swap market, helping to cause the catastrophic collapse of the entire world's economy. Known as naked short selling, the fraudulent practice caused the collapse of hundreds or even thousands of American companies, cost our country countless jobs, decimated retirement funds, and even flooded the market with fake mortgages. The Wall Street Conspiracy chronicles the stories of a small group of activists who worked tirelessly to expose the corruption in our financial markets. Coming from all walks of life, some were entrepreneurs like Overstock CEO Patrick Byrne and Eagletech's Rod Young, others were activists, like Mark Faulk, Darren Saunders, and Dave Patch, economists like Susanne Trimbath and Robert Shapiro, and lawyers Wes Christian and John O'Quinn. They tried to educate investors, Congress, the SEC, and even the President about the imminent danger of allowing this financial terrorism to continue, but their cries fell on mostly deaf ears. This is a story of rampant greed, corruption, and the failure of our government to act to stop it... before it was too late.

DRS Your GME AnimorphFan1996 • 12 months ago • 86%

upsidechronicles.com

How Wall Street short sellers are trying to control the Gamestop narrative BY JACK TAZMAN SEPTEMBER 5, 2021 Getting people to feel bad for greedy billionaires isn't an easy sell. The entities that shorted GameStop have definitively not closed their positions. The math simply doesn’t check out. But this article isn’t going to make the case for GameStop’s market positioning. It is an examination of the strategies used by media outlets to push narratives and sway public sentiment to be better aligned with Wall Street’s agenda. Watching this story unfold has been one of the most enlightening experiences in understanding not only how deeply broken and corrupt our markets and financial system are, but how the media is one of the most important tools in their box. The implications of the tactics used to frame retail investors for the greed and corruption that created the GameStop fiasco extend beyond this particular story. GameStop is hardly the first narrative powerful interests have doctored and spent top dollar controlling. It is already not the last. The media industry’s business model Running a media operation – from websites to TV stations – isn’t cheap. You have writers, editors, expensive equipment, a team of highly paid engineers to make everything run smoothly, sometimes lawyers, just to name a few. Well known publications have some of the finest creative in this business, who do an impeccable job keeping the media medium looking premium. But looks can be deceiving. Their attention to detail and high-quality presentation is often conflated as credibility for the content being presented. For the most part, media businesses are operated at a net loss. It’s a cost – not a revenue source. In other words, you have to pay to play. But media coverage itself has value for those who have a vested interest in controlling public sentiment for the sake of other revenue-producing ventures. That’s why many large corporations have large stakes in or outright own media outlets. Consider this mash up of various local news networks promoting Amazon using the exact same scripting. Now that’s the kind of coverage only a handful of people could buy. Jeff Bezos bought the Washington Post and Marc Benioff bought TIME magazine. Rupert Murdoch owns News Corp, an umbrella cooperation that consists of major outlets, from FOX news to the Wall Street Journal. They aren’t the only ones. In the case of GameStop, the parties with vested interest in controlling the fallout – hedge funds that sold short and Citadel – presumably had strong connections with CNBC, Motley Fool, Yahoo! Finance, Benzinga, Barron’s and Seeking Alpha. While they were able to get their message out in other outlets as well, these media sources were especially diligent in their coverage spin. That makes GameStop an interesting case study in the media’s ability to sway public opinion on behalf of the wealthy and corporate interests. Short selling 101 The jist of the Gamestop (GME) saga is this: Short sellers got too greedy and started playing dirty. The way short selling is supposed to work is that a short seller borrows a stock from a broker, then sells it in the market. They keep the cash from the sale, but are on the hook for the share they sold. The idea is if the stock goes down, they can buy the shares back at the lower rate and pocket the difference. Short selling adds nothing of value to the real economy. Wall Street has paid good money to defend short selling, because short selling makes good money for Wall Street. It is by its most fundamental nature, market manipulation. Short selling gives big players the ability to manipulate supply and demand. When a stock is shorted, it effectively puts supply that was never issued by the company into circulation. Combined with algorithmic trading and the budgets to hire quants and computer engineers, players like Citadel and Melvin Capital not only manipulate the market – they can effectively decide exactly what price point a stock should be, provided another whale doesn’t challenge them on it. Short selling is market manipulation. Even if we were to suspend disbelief and say that short selling has a place in the market, in theory, there should never be more than 100% of the total shares shorted. If a company issues one million shares, there could be a maximum of an additional one million shares in borrowed status, bringing the total shares in circulation to two million. That’s if every single share the company ever issued was shorted. Why we would want to put such a heavy burden on the real American economy when so few people profit off of it is a question we should be asking our politicians and representatives. It should cap out there. But it often doesn’t. The delisting jackpot If short sellers can drive a stock price to a low enough level to get the company delisted, there are two bonus prizes. For one, they don’t have to buy the stock back and return it to the lender. They pocket the money from the sale of the stock they never paid for. Secondly, because they never bought the stock – only borrowed it – they technically never owned the asset. That means there is no taxable event. They get to keep the money without giving a penny back to the real economy. The result is: Short sellers are financially incentivized to drive stock prices down to the point of delisting or even bankruptcy. Sometimes, shorting every single share the company ever issued doesn’t quite drop the price low enough to get the company delisted. They may need to overwhelm the market with supply to dilute the value of real shares. Market Makers like Citadel and stock brokers lend short sellers shares. As a market maker, they don’t have the share on hand in order to lend it out. The justification they shout from rooftops is that they need to provide liquidity. Apparently, despite sophisticated computer algorithms that are able to check numerous exchanges for sales prices within fractions of a second in real time for tens, if not hundreds of millions of transactions, they still haven’t quite found a way to count how many shares they have or lent out. They lend them out anyways. That’s how GameStop ended up with well over 100% of its float shorted. With the help of colluding marker makers and brokers, short sellers can continue to short the stock, even after every single share is already borrowed and shorted. Market makers can provide short sellers an endless supply of shares to create relentless sell pressure on a stock and and drive share price down. In Gamestop’s case, every share ever issued was ‘borrowed’ and shorted multiple times over. As recently as February 2020, short sellers could have closed out their positions at just $3.60 per share. But they chose not to – and instead recommitted to the delisting jackpot. Ryan Cohen Little problem though: Ryan Cohen. Ryan Cohen is the billionaire founder of Chewy.com. Cohen spun the pet supply e-commerce platform up from scratch to multi-billion dollar company in less than six years before selling it to PetSmart for over $3 billion. That cements his status as an e-com whiz kid. Ryan entered the Gamestop fold in August 2020 with a nine million share purchase. He upped his stake to about 13% of the company in December 2020. That earned him some seats on the board, from which he pushed through major changes. Among them: Paying off the company’s long-term debt, aggressively dialing up their e-commerce and product offerings, leasing out industrial scale distribution centers, raising almost a billion dollars with a shelf offering of the stock for the company to fund these transformations, and lining the C-Suite with all stars from Chewy and Amazon. And he did all that in less than a year. Long story short: Gamestop isn’t going bankrupt. It’s no longer at risk of getting delisted. That’s really the crux of the matter. As such, all those shorted shares will have to be bought back from the open market after all. The shorters had started their saenguination of Gamestop when stock price was hovering around $50. They bled it down to $3.60 – pocketing $46 profit per share – by selling hundreds of millions of shares. But they wanted the grand prize. They wanted Gamestop delisted so that they wouldn’t have to return the borrowed stock, and pocket the profits tax free. Their predatory greed backfired. Call in the spin doctors When this realization came to light, Gamestop short sellers and the market makers that enabled them knew they were in hot water. They needed two things to happen: retail traders needed to be persuaded that the squeeze was over so that they would sell out of their positions; and any further demand on the stock price needed to be curtailed. They needed to make the price spike look like a fluke. For that they turned to one of the many tools in their well-funded arsenal: the media. It was a story that even the most brilliant minds in marketing and politics would struggle to make lemonade from. How could the media sway public opinion against retail traders and in favor of a multi-billion dollar hedge fund who had fixed to bankrupt a struggling American retailer for profit and wipe another 12,000 American jobs off the table? How could they cover their tracks? To varying degrees of success, here are five strategies they attempted. 1. Create/discredit a scapegoat From the very first time the GameStop “short squeeze” hit the headlines, it was not in a flattering light. The goal was to distract away from the acute dynamics of the shorts needing to buy back the available float several times over. They needed the January run up to look like an internet fad – as arbitrary and inexplicable as the Tide Pod challenge. Articles published in Barron‘s, Motley Fool, Wall Street Journal, CNBC – all bought and paid for by Wall Street hedge funds – aimed to make this activity look frenzied, unfounded, antagonistic, and transient. GameStop retail shareholders were depicted as as “unsophisticated,” “amateur” day traders who were all feverishly chasing an arbitrary whim. They published article after article calling the force behind the chaotic price movements “speculative.” Guests on CNBC repeatedly stated that their hedge fund colleagues were “right” to short Gamestop. Apparently, they were very sophisticated and entitled to feast on a company that was struggling, but wasn’t dead. That anyone should disagree with them and not concede their ‘recommendations’ was indeed a shock to their playbook. ‘Analysts’ and ‘financial news sources’ repeatedly stated they would cease coverage of the stock because the ‘unpredictable retail investors’ made it ‘impossible to properly analyze.’ And yet, they continued to publish articles on it day after day, perhaps more than any other stock. It’s a pretty transparent attempt to curtail other investors from getting in on the action, which would tighten supply and make every rebought share more expensive. They had to discredit the retail investors’ thesis and the retail investors themselves. In reality, their bitterness that retail actually knew the game they were playing seeped through. With supply now locked up in the hands of retail traders and short sellers on the hook for every single share in circulation, they were now looking down the barrel of losing everything. 2. Distractions and diversions: ‘Forget GameStop’ The next strategy they implemented was to create distractions. They began pushing the “next big short squeeze.” The goal was to redirect traders from Gamestop into other trades that would benefit short sellers. The first major ‘hey-look-at-this-instead!’ was silver. Headlines came out trying to leverage the ‘gotcha’ moment Gamestop had created by promoting similar market dynamics in silver. Not-so coincidently, those on losing side of the GameStop rally also happen to be heavily long on silver. An influx of capital from retail investors chasing the news would have produced profit for them. The stars align. Who happened to be long on silver? Citadel – the marker market who failed at orchestrating the bankruptcy of Gamestop. It would not be their only attempt to distract. The GameStop situation is unique because usually, Wall Street hedge funds and players aren’t on the defense. Rather, they proactively use these tools to manufacture sentiment. That involves getting “financial news” content creators like Jim Cramer and writers at various publications synced on a narrative. It’s worth noting that CNBC’s Jim Cramer also advised investors to keep their money in Bear Sterns just days before the bank’s meltdown in 2008. The dynamics were different then. But the relationships leveraged were the same. 3. Playing with semantics Gabe Plotkin, Melvin Capital’s founder and CIO as well as several of his Wall Street cronies such as Citadel’s Ken Griffen, and began making rounds on CNBC. They were eager to tell the world that they had covered their short positions. Technically this was true. They had covered their short positions. But they were using hair-splitting semantics to create deception. Covering a short position means they had moved things around on the books so that they had enough money to maintain their short positions or hid them in Wall Street’s market manipulation tool box that is the derivatives market. What they need to do is close their position – return the borrowed stock to lender. To illustrate this, let’s use some simple math. Say I have a net worth of $100. I borrow 10 shares and sell them into the market at $10 each. I now have $200 dollars, but I’m on the hook for 10 shares. If the price goes down to $5, I buy back the ten shares, close the position, and pocket the difference – in this case, $50. But let’s say it doesn’t go as planned. The price shoots up to $15 dollars. I now have $200 and owe 10 shares that have a combined market worth of $150. That means I lost $50 – but I’m still good for it. If that share shoots up to $25 dollars, I have $200, but I owe 10 stocks at $25 each, which would cost me $250 to buy at market rate. That puts me in margin call territory. My friend lends me $100 (or in Gamestop shorter’s case, $2 billion). Now I have $300 in cash, but owe ten shares that are currently worth $250 total. I have covered my position. I am solvent…for now. Thanks to the cash infusion, I am able to buy ten shares from the market to return them to the lender. But I still owe them to the lender. Alternatively, I could reconfigure my position into options, swaps, futures, and other financial instruments that changes the reported figures on critical metrics that were under the microscope at the time, such as short interest percents and volume. In both cases, I have covered. I have not closed. The short positions that caused the January run ups are still on the books – and still need to be bought and returned to the lender. The need to buy huge amounts of shares on the open market is still there. Now that we understand that, take a look at this very misleading headline from CNBC: 'GameStop jumps more than 130% even as hedge funds cover short bets, scrutiny over rally intensifies' The implication is that the move doesn’t make sense in light of the fact that shorts covered their positions. Thus, the 130% jump must be due to baseless ‘retail frenzy.’ But covering the positions means shorts are still on the hook. 4. Dilute the conversation – with bots When it comes to controlling the narrative, Wall Street has found great success in using its traditional channels such as publications, news outlets, and TV programming. After all, media is a tough business to be profitable in independently. Little problem with the Gamestop situation: The story was mostly unfolding in online forums. In the days that followed the January runup, the Reddit forum r/wallstreetbets, which served as the early epicenter of the Gamestop movement, experienced a tremendous influx of new subscribers. Going into 2021, r/wallstreetbets had around 2 million subscribers. By mid February, it was approaching 10 million. Sure, the January run up had brought some interest to the subreddit. But a tremendous amount of these new subscribers were new or accounts that had been dormant for extended periods of time, back from the dead for the sake of Gamestop. These new accounts – many just days old with no history other than sowing fear, uncertainty and doubt specifically about Gamestop – invaded subReddits en masse. They used a host of tactics. Some tried coming from a caring standpoint, inexplicably interested and concerned about other retail investors. They encouraged users to sell now while they still can. The strategy wasn’t terribly unlike headlines. Others ridiculed people who weren’t selling as ‘bagholders.’ Still others complained over and over that the GME narrative had overtaken the culture of the subreddit – the squeeze was over and investors needed to come to terms with it. It’s worth noting that two weeks later, Keith Gill, also known as DeepFuckingValue, posted an update in which he not only didn’t sell – he doubled down. Creating thousands, if not millions of accounts and being active in massive communities day after day is a tremendous amount of work. Luckily, wealthy Wall Street players have the resources to hire programmers and spamming companies to create armies of online bots. They use these bots to make it appear there are many people who’s individual experiences align with the overall story being crafted. That would push GME holders in the right direction…as far as the short sellers were concerned. Superstonk fights back Luckily, some preventative measures were put in place to curtail the presumably Wall Street-bankrolled bot misinformation army on GME-specific subreddits like r/GME and r/Superstonk. Subreddit r/Superstonk in particular has imposed some of the most rigorous posting requirements on Reddit. In order to vet out Wall Street’s misinformation bot armies, the subreddit’s moderators require contributing accounts have at least 120 days history to comment, 240 days to post. The accounts are also required to have a minimum of 1500 karma points (comment) or 6000 karma points to post. Everyone is able to view posted content. They are among the strictest of the subreddits, the result of coordinated, hostile attempts to overwhelm the conversation with paid misinformation bot accounts. These bot accounts are generally new and had little, if any account activity (as they were only created for this purpose). These requirements vetted out a solid majority of them. Notably, the imposition of these standards almost exclusively eliminated negative sentiment and proactive instigation of infighting. All the new misinformation bot accounts seemed to soley exist to push a narrative and give the appearance that there was much more division than there really was among actual, established Reddit users. The difference in tone and overall culture of the subreddits has improved drastically since. There is little in fighting, incredible journalism, sophisticated analysis, supportive threads, critical thinking about macroeconomic trends as well as some memes that will surely be in museums of fine art one day for their cultural significance. Overall, it is among the most positive communities on the internet. The divide-and-conquer strategy to distract from the real source of problems – one of the mainstream media’s favorite plays – failed here. 5. Cherry pick what gets out there – and what doesn’t There was an attempt to takeover the subreddit control overall. Respected moderators sounded the alarm that the subreddit was experiencing a hostile takeover. In February 2021, r/wallstreetbets moderator u/zjz created a post announcing the thread had been infiltrated and they needed Reddit’s support. “You deserve to know that this place is being sold out on multiple levels by the people at the top, and that everyone below them wants them gone and is heartbroken." "They’ll probably take this down and remove me and hire some asshole to replace me. fuck it. hi cnn. fucking hilarious some assholes trying to call us ows when we’re literally being occupied.” – u/zjz Users began posting screenshots of direct messages they had received offering payment for generating fear, uncertainty, and doubt. Some even had a payment structure – the more engagement the comment or post received, the higher the payout. It begs the question: Who is paying to recruit users for this purpose? And if the shorts have already closed their positions and therefore have no vested interest in the situation – why? The logical explanation is that they have not closed their positions. They still have vested interest in getting retail investors to sell. This is an old Russian propaganda tactic known as the Firehose. The strategy is to overwhelm the conversation with doubt and mixed messaging so it becomes very difficult to discern the truth. Ultimately, when it came to r/wallstreetbets role int he Gamestop saga specifically, Wall Street won. Eventually, GME investors were forced to create new subreddits to share information and research. r/GME and r/Superstonk became the new gathering places of GME investors. r/Superstonk tried to fight the spread of FUD and bots by imposing account age and karma requirements. Both eventually became targets for harassments and moderator takeovers, too. That’s because those on the losing end of the Gamestop fiasco – Wall Street hedge funds and the banks that back them, such as Credit Suisse and Citadel – understand the importance of controlling the narrative. 6. All news is bad news Over the last year, Gamestop has had a good run. They paid off their debt, ramped up their ecommerce activity, leased out massive warehouses to support that, raised a billion in capital with small shelf offerings, recruited executives from multi-billion dollar companies such as Chewy and Amazon, among other positive developments. But the headlines try – almost embarrassingly – to spin these positive developments negatively. Check out these headlines that followed major company announcements: Gamestop paid off its outstanding long term debt – the very debt the short sellers thought meant certain bankruptcy for the company. Gamestop ousts executives who oversaw the period analysts say justified aggressive short positions and replaces them with former Amazon and Chewy executives. Gamestop reports 25% increased sales in 2021 Q2 earnings call: "Is GameStop Worth More Than $10 A Share? Analyst Slams 'Shameful' Earnings Call - Benzinga" "GameStop: The Stock Deserves To Fall" Way to keep it objective there, Seeking Alpha. Why an unbias media source would feel a well-known retailer ‘deserves to fail’ is anyone’s guess. The bottom line The bottom line is media coverage is a costly business. Gamestop short sellers have spent good money trying to get their messaging out there. When we think of news, we often think of journalists doing deep research, talking to insiders and digging up the truth, no matter how obscured it might be. It’s a perception we need to unlearn. Most media outlets are now marketing machines posing as news coverage. It’s a great strategy – it makes it seem as though unbiased third parties vouch for the like of Amazon, the defense contracting industry, and others. Meanwhile, real journalism and stories that do seek the truth and can easily be dismissed as a conspiracy theory and buried. And that’s where they’ll stay. Reach and influence is expensive. Unfortunately, Americans have been conditioned to expect content to be free. This bodes exceptionally well for those who can afford to produce it as a cost of doing business, and poorly for those who want to get the real story out there. The result is, the rich and powerful fully control the information that gets out there on a wide scale. So next time you’re watching the news, consider who might have a vested interest in getting the information presented out there. If we aren’t paying for good information, we will only get information that someone else has paid for us to get. At the time of this writing, GameStop is trading over $200 a share, a YTD gain of almost 1000%. If you’re starting to consider that CNBC, analysts, and the Motley Fool could be wrong about the whole thing, just remember this. They already are. Edit: Wow! Thank you Reddit – specifically – r/Superstonk for your support and thoughtful feedback! We are humbled by your response and kind words, have read every comment, and fully plan to keep covering various angles of the GameStop story. Jack Tazman Jack Tazman is a Baltimore, Maryland native. He attended Washington University where he studied political science. Since then, he worked as a writer for various national news organizations specializing in politics and policy. He now resides in New York City as a freelance writer and political consultant.

DRS Your GME AnimorphFan1996 • 12 months ago • 100%

www.youtube.com

Credit to [ajwinemaker](https://lemmy.whynotdrs.org/u/ajwinemaker) for posting [this music video](https://lemmy.whynotdrs.org/post/37247) to [the GME Resistance Radio](https://lemmy.whynotdrs.org/c/music) community two months ago.

DRS Your GME AnimorphFan1996 • 12 months ago • 97%

upsidechronicles.com

GameStop and the Great Direct Registration Experiment BY JACK TAZMAN DECEMBER 11, 2022 GameStop investors are taking their shares out of brokerages and into their own names. They're also making history. GameStop investors take on Wall Street via the great direct registration experiment through GameStop's transfer agent, Computershare. Little girl faces raging bull on wall street, computershare ring Direct registration is a hot topic in GameStop-centric subreddits. The feed of r/Superstonk, the most prominent of the bunch, features post after post after post of white backgrounds with off-center thick purple rings. Occasionally, the purple donut parade is spliced with photos of black-and-white documents and a few personal items – some Pokemon cards, a rock climbing rope and clip, even a lacy hot pink thong – over a barcode. Although there is an exceptionally high volume of these posts, each one has thousands of upvotes and numerous awards. The purple circles are proof of direct registration of shares with GameStop’s transfer agent, ComputerShare. In ComputerShare’s user interface, portfolio holdings are represented visually by rings, each holding represented by its own color and proportion of portfolio value. A fully purple circle represents a portfolio that is 100% in one holding – all in. Prevailing sentiment among the GameStop subreddits is that direct registration is key to preventing ongoing market manipulation and price suppression of their favorite stock. Whether or not that is true is uncertain; GameStop individual investors are sailing into uncharted territory. There is no historical precedent of a public company having a mass wave of direct share registration by individual investors in a company that was not at an acute risk of bankruptcy. Here, we’ll dive into the back story, the impetus behind mass direct registration, and why what GameStop shareholders are doing, regardless of outcome, is historic. GameStop individual investors on a treadmill Fueled by the events of late-January, GameStop investors dug deeper into the machinery of the markets. According to the subreddit’s most popular due diligence posts, the reduction in reported short interest was really just clever book cooking by Wall Street, who had shuffled things around to obscure the real picture. Prevailing sentiment was that Wall Street not only failed to close their short positions, but continued to short the stock throughout 2021 in order to suppress price. Perhaps one of the most groundbreaking revelations for many individual investors in the wake of the January run-up was that they didn’t actually own any stock. That’s not only true for GameStop. It’s true for almost every equity held in any brokerage account. Almost every stock certificate in America is registered to the DTCC’s nominee, Cede & Co. Legally, Cede & Co. effectively has a monopoly on the American stock market. When investors buy shares through a broker, they get what amounts to the slop of legal ownership rights. Cede & Co. remains the registered owner of shares. GameStop’s stock borrow fee curiosities One of the most compelling idiosyncrasies of the GameStop saga is the curiously persistent low stock borrow fee. Short sellers pay brokers an interest rate in exchange for access to the shares for which the broker is a “custodian.” In other words, they monetize by lending out their “customers'” shares to short sellers. (In reality, short sellers are brokerages’ real customers). Short sellers borrow shares from real investors, often without the real investor knowing it, and sell I.O.U.s into the market. By hitting the market with this extra, indistinguishable supply, short sellers drive the prices of the stocks down, then buy them back lower and pocket the difference. The more money they have, the more they can drive the price down, particularly if stock borrow fees are low. The broker is happy to offer up their account holders’ shares to short sellers. Stock lending fees are a major source of broker revenue. It’s hard to imagine a more conspicuous conflict of interest. Additionally, stock borrow interest rates are usually a function of supply and demand. If there aren’t many shares to borrow, the short seller has to pay the broker higher interest rates to access more ammo. Stock borrow fees can get very high, making it costly for short sellers to maintain their position. As the stock borrow interest rate climbs upwards, short sellers are increasingly incentivized to close out their short position, even if it means taking a large loss. The stock borrow fee of GameStop has remained exceptionally and questionably low for the better part of 2021. For example, iBorrowdesk’s one-year chart shows GameStop’s stock borrow fee started behaving curiously after January. IBorrowDesk only reflects the lendable shares of Interactive Brokers, the world’s largest broker. For some reason, Interactive Brokers kept the stock borrow fee for GameStop at less than 1%, even when they got down to their last few hundred shares, at which point they could have easily charged more. In fact, between early December 2020 – the earliest stages of individual investor interest in GameStop stock – and the end of January 2021, Interactive Broker’s stock borrow fee for GameStop never dipped lower than 16%. In the weeks leading up to GameStop’s highest price point in late January, the stock borrow fee skyrocketed, peaking at 84% on January 26th, 2021. At those rates, keeping short positions open on GameStop was cost prohibitive, particularly for large positions. Two days later, Robinhood and other brokerages shut the buy button off on GameStop stock and a handful of other securities. Simultaneously, millions of shares became available to borrow on Interactive Brokers. As expected, the stock borrow fee fell precipitously. By the time Robinhood and other brokers enabled the buy button on their platforms on February 04, 2021, the stock borrow fee had dropped from its peak of 84% to 10%. One week later, it was at 2%. With the exception of a small run up that coincided with the late February $40 to $105 rise in price, the stock borrow fee has consistently stayed at or below one percent since March 13, 2021. It has stayed that low, regardless if the broker reported 1,000 or 800,000 lendable shares. To double up on the abnormalities, Fidelity, the largest broker in the U.S., also left money on the table by listing GameStop’s stock borrow fee at less than one percent, regardless of how many shares they listed as lendable. It’s quite unlike anyone on Wall Street to charge less where they can charge more. Unfortunately for GameStop individual investors, it is incredibly affordable to short GameStop. It’s one of the lowest stock lending interest rates of any security on the market, and has been all year. If there really are massive outstanding open short positions, at these rates, they can stay open for years. It’s certainly cheaper than trying to close them as liquidity gets drier and drier, priming conditions for a rapid price increase if any meaningful buy pressure hits the tape. With brokers always finding more lendable shares and continually lending (even when GameStop hit ‘hard to borrow’ lists), short sellers could avoid closing out with massive losses. In brokers we don’t trust But if there weren’t any shares to borrow, there would be nothing to artificially suppress the price with. In theory, there are settings investors can change within their brokerage accounts to prevent their tally of shares from being lent out. If investors made their shares unlendable, brokers wouldn’t lend their shares to short sellers. According to the Terms of Service for Fidelity, Robinhood, and other brokerage firms, shares held in a cash account (as opposed to a margin account) are unlendable. In many cases, brokerage account default settings allow for stock lending. GameStop investors called their brokers en masse requesting that their shares be prohibited from being lent out. Yet, day after day, brokers posted lendable shares. There have been numerous posts by individual investors about their accounts mysteriously reverting back to margin accounts. This was most often noticed when they changed brokers. But after brokers shut off GameStop’s buy button during the January price run, a high volume of GameStop investors left their brokers. Robinhood in particular took a public flogging, though it wasn’t the only broker to restrict GameStop trading. WeBull, eToro, E-Trade, Interactive Brokers and others did the same. This is important, because it is not the only case of several ostensibly independently functioning brokers handling GameStop trading in ways that are counterintuitive. During this mass exodus, GameStop-oriented subreddits posted dozens of examples of their shares arriving in their new brokerage accounts with a strange phenomenon: Their cost per share basis was significantly higher than what they had really paid for it. In some cases, the reported cost per share were higher than GameStop’s peak price point of $483 on January 28, 2021. GameStop investors speculated that brokers actually bought shares at the time of transfer, not at the time investors had given their brokers money. Considering that more than half of GameStop’s trading activity occurred in dark pools in 2021, these mysterious, exceptionally expensive purchases were presumably made “off the tape.” Upon rumors that Fidelity had never shut the buy button off, and in part due to billionaire Mark Cuban’s recommendation to find a broker with trillions of dollars on the balance sheet, Fidelity became the broker of choice for GameStop individual investors. But Fidelity would fail to live up to its name in the eyes of individual investors. Dr. Trimbath and direct registration In late April, Dr. Susanne Trimbath agreed to do an Ask Me Anything with GameStop individual investors on r/Superstonk. Trimbath holds a Ph.D in economics from New York University as well as an MBA from Golden Gate University. She worked at Federal Reserve Bank of San Fransisco for over five years and at the Depository Trust Company for six years. Her book Naked, Short, and Greedy: Wall Street’s Failure to Deliver outlines how settlement systems enable naked short selling of equities by letting failures to deliver happen in droves with no repercussions nor intervention. Trimbath is arguably the most knowledgable person on the loopholes in the machinery of the stock market out there. She may be one of the only people who has been on the inside of these organizations honest enough to point out the systemic risk they present and destruction they cause. It was during Trimbath’s AMA that many GameStop individual investors first learned about direct registration. “An individual can still ask to have their shares registered in their own name,” Trimbath says within the first five minutes of the interview. “GameStop has a direct stock purchase program where you can just buy your shares from them.” Though Trimbath’s Ask Me Anything occurred in late April, it would be months before the potential of what she had said would be widely realized by the GameStop individual investors. Direct registration: My share, my name As time went on, GameStop’s stock borrow fee continued to hover at around one percent. Lendable shares always became available. GameStop’s stock continued to be relentlessly shorted. With all the shares legally registered in Cede & Co.’s name, there was no real way to tell if individual shareholders’ shares were really in their accounts or not. All investors had was their broker’s word. It wouldn’t be until late July that GameStop shareholders would circle back to what Dr. Trimbath had brought up in her Ask Me Anything. By direct registering their shares with GameStop’s transfer agent ComputerShare, investors could be certain that their shares were real, not being lent out to parties with conflicting interests, and legally in their name. The hypothesis: As more shares became direct registered, fewer shares would be available to short sellers. If short selling adds artificial supply into circulation, direct registration of shares reduces real supply available for shorting. Soon, the first of purple rings began popping up in feeds. Investors were taking their equities out of Cede & Co.’s name and registering them into their own. Frequency escalated. Debate ensued. But slowly, the sentiment of the subreddits changed. In early September, a share-counting bot was created to tally the number of direct registered shares based on posted screenshots of purple circles or of the documents sent by ComputerShare via mail. The bot has built-in protections against double counts and other forms of being gamed. Relative to the market at large, GameStop has a fairly small number of shares outstanding at just under 76 million according to their latest SEC filing. If there really are significantly more shares in circulation than were legitimately issued by the company, what would happen if investors were able to lock the float? When investors direct register: Lessons from the past There has never been a case of investors direct registering the total shares outstanding. But there has been a past attempt. It didn’t end well. Back in 2003, there was a company whose positioning in the market shared several characteristics with GameStop today. CMKM, a diamond mining company, garnered significant attention online from individual traders. On Investor’s Hub, an early 2000s online forum where users discuss stocks, the CMKM board has over 355,000 posts, despite the fact that the stock has been delisted for almost 20 years. By comparison, Apple has fewer than 145,000. New posts continue to be published on CMKM’s forum almost daily. Like GameStop, rumors of extraordinary amount of CMKM shares in circulation fanned hope for a short squeeze. Approximately 40,000 individual investors bought in and followed the company closely in online discussion boards. While the SEC’s investigation into the matter estimated that there were 620 billion more shares in circulation than the 800 billion formally issued by the company, many individual investors believed the real number to be much higher. Some even believed the total shares in circulation was in excess of three trillion. CMKM individual investors believe the overextended supply was the product of short selling. They anticipated significant buy pressure would be created when the time came for these positions to be closed out. When the company announced there would be a dividend issued to shareholders – but only if they held their shares in their own name – a mass number of CMKM shareholders pursued direct registration. Retail is left holding the bag The DTCC and the brokers that sold CMKM investors counterfeit shares realized that they could be forced into buying a large number of shares in tight liquidity as more shares were locked into direct registration. Brokers began blocking shareholders from being able to withdraw their certificates. Meanwhile, brokers were aggressively direct registering the shares into their own names while telling their account holders they couldn’t do so for them. Investors that failed to direct register their CMKM shares became known as the ‘Unshareholders.’ Hundreds of posts in message boards tell stories of individual CMKM investors waking up to the shares in their brokerage accounts simply being cancelled or sold for no money. In some particularly egregious cases, investors were even charged a fee for the sale. Their investment was simply gone. In 2005, CMKM was delisted. With the cancellation of all counterfeit shares, the buying pressure that would have been generated by short covering had been snuffed out. Though there have been arrests and successful lawsuits, CMKM investors have yet to receive any indemnification for their loss. Twenty years later, there are still active lawsuits relating to the CMKM mess. GameStop is no CMKM But other than the large individual investor base and mass wave of direct registrations by shareholders, GameStop has little in common with CMKM. For one, GameStop is a real business. Investors know this – they can buy products from them online or visit a location in the mall. CMKM…questionable. The diamond mining company reportedly didn’t even have an office location. It was run out of the CEO’s Las Vegas home. Allegedly, CMKM did not engage in any revenue producing activities in 2004, the year before it was delisted. By contrast, GameStop has billions in annual revenue. In its Q3 2021 earnings report, GameStop reported $1.3 billion in revenue, almost a 30% increase year over year – its third consecutive quarterly earnings expectations beat. CMKM was a penny stock, making it high risk for bankruptcy and delisting. At this point, GameStop is not likely to go bankrupt in the foreseeable future. The company has over $1 billion in cash on hand. This year, it secured several large-scale distribution centers to support its pivot to e-commerce. It has gone on a hiring spree, bringing in talent from prestigious companies, including executives from Amazon and Chewy. CMKM’s delisting played a big role in investors getting left out cold. GameStop is far from being at-risk for delisting. Moreover, CMKM itself defrauded investors. According to the SEC suit against the company, company insiders colluded with their transfer agent to continue selling shares beyond what the company had registered with the SEC. The company’s general counsel, Brian Dvorak, was later irrevocably disbarred for writing 440 opinion letters to the transfer agent, certifying the unregistered shares the company fraudulently sold to investors. The insiders orchestrating the fraud knew there were billions, possibly trillions of counterfeit shares in circulation. Why not double down by setting off a short squeeze? Company leadership announced a dividend for real shareholders. If the investor’s holdings were held in street name (i.e., in Cede & Co.’s name), they would not be eligible. Ultimately, the FBI and Department of Justice got involved. Arrests were made. InFidelity On the morning of November 29,2021, GameStop individual investors woke up to betrayal. Fidelity, the broker that had absorbed a majority of Robinhood’s late-January exodus, listed almost 14 million GameStop shares as ‘available to borrow.’ Strangely, despite singlehandedly posting over 22% of GameStop’s total float as lendable, the security was labeled as ‘hard to borrow’ in Fidelity’s own interface. GameStop individual investors were outraged. Where had Fidelity obtained this massive number of shares if they were not lending out their account holders’ shares? Later that day, Fidelity updated the number to around 2 million, noting that the mysterious 11 million shares were an “overestimation” in its official response to complaints. A number of GameStop investors weren’t satisfied with this explanation. Purple circle posts started to saturate r/Superstonk’s feeds, each getting thousands of upvotes, no matter how big or small the account. A site tracking the information officially counted by the DRS bot registered tidal waves of new accounts coming in, some with less than $1,000, others with upwards of $1,000,000. Direct registration starts to shed some light As of right now, r/Superstonk’s direct registration bot has officially counted just over 1.1 million shares. That is the sum of approximately 8,300 confirmed posts of ComputerShare accounts and share count. In its most recent earnings call, GameStop CEO Matt Furlong noted the number of shares with ComputerShare for the first time: 5.2 million shares as of October 30th, 2021. “As always, we appreciate all the enthusiasm and support from our customers, employees, and stockholders who we believe are the best in the world,” he added. Thousands of new accounts have been registered since October 30. Therefore, they are not reflected in the reported 5.2 million count. While none of the confirmed figures show individual investors the whole picture, they do put some rough notches in the bedpost. Another interesting data point that has come out of the mass direct registration is an idea of how many GameStop individual investors there are. GameStop investors noticed that the account numbers on ComputerShare certificates were in ascending, chronological order. ComputerShare account numbers could confirm a minimum number of individual investors. The highest ComputerShare account number (not counting the last digit) confirmed at least that many shareholders had registered, even if they hadn’t posted. The share-counting bot’s sampled data calculates estimations of shares per account, an estimation that get better as its data set deepens. Calibrating expectations Considering the massive spike of trading activity in dark pools this year, individual investors have been at a gross information disadvantage when it comes to trading activity. They are only shown what big players want them to see. Meanwhile the big players get to see every move, and even influence the narrative. Is it still poker if one player has to show their hand? As such, estimations of the total number of shares in circulation have varied from 140% of the float on the low end to one billion shares on the high end. A billion shares in circulation is unlikely in light of the confirmed 5.2 million shares, even factoring in the October 30 cutoff date. With October 30 landing at essentially the mid point between the real beginnings of direct registration activity, it’s more likely that somewhere between 10–15 million shares are currently registered. While the number is still growing, that figure represents about 16-20% of shares outstanding – a long ways to go. GameStop’s chairman Ryan Cohen, who invested in GameStop via his company RC Ventures, holds 9 million shares. The 5.2 million figure suggests that as of the record date, Cohen himself had not direct registered his holdings. But purple rings continue to pour in, giving individual investors what they really need to understand the picture they have been deliberately cut out of: data points. Uncharted territory GameStop seems to have learned from the precedents of the past, gracefully sidestepping them and staying tight lipped, presumably to keep legal liabilities to an absolute minimum and company initiatives sabotage free. What will happen if GameStop shareholders direct register all of the shares outstanding? No one can say. It has never been done with a stock that wasn’t at acute risk of bankruptcy or delisting. With bankruptcy off the table, a meaningful turnaround story in progress, improving balance sheets and earnings reports, and an all-star team, the confluence of events around GameStop trading activity has the potential make history. For now, the only thing that is certain is that GameStop investors are setting precedents. Just what that precedent will be remains to be seen. *This article previously and erroneously identified Brian Dvorak as having received a promotion to a large brokerage firm after his role in the CMKM scandal. Upon follow up, it was discovered that Upside had falsely associated an unrelated person of the same name. Subsequently, we removed that part of the article on January 12, 2022, as it was untrue. We apologize for the error. AUTHORS Jack Tazman Jack Tazman is a Baltimore, Maryland native. He attended Washington University where he studied political science. Since then, he worked as a writer for various national news organizations specializing in politics and policy. He now resides in New York City as a freelance writer and political consultant. Tanja Fijalkowski Tanja Fijalkowski is an award-winning writer, editor, and designer. A North Bay Area native, she has written for various financial, business, history, and science publications. She's a deep-dive researcher with a strong command of data analysis and simplifying complex concepts.

DRS Your GME AnimorphFan1996 • 12 months ago • 96%

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Dole Case Illustrates Problems in Shareholder System By Steven Davidoff Solomon March 21, 2017 The share ownership system in the United States is fraying. And while its shortcomings have been largely behind the scenes, now they are going to cost some innocent shareholders money. The problems have become apparent as a result of a Delaware court case over the $1.2 billion buyout of Dole Food in 2013. A $115.7 million settlement was reached after a lawsuit that accused David H. Murdock — Dole’s controlling shareholder and chief executive — and his lieutenants of conflicts of interest in taking the company private. Former Dole shareholders will receive $2.74 a share — a nice chunk of change in addition to the $13.50 a share originally paid in the deal. Still, because of the shareholder ownership system, some of those Dole shareholders may not get that money. The reason is that while shareholders think they own the shares they buy, they don’t in a sense. That may come as a surprise to those who check their online brokerage accounts daily or see traders on a floor of an exchange reacting to price movements. A market that in many ways is open and transparent is underpinned by a system of share ownership that can be anything but. Share ownership in the United States is conducted through the Depository Trust Company, which was formed after the back-office scandal of the early 1970s. At that time, trading volume on Wall Street became too much to handle, and brokerage firms were swamped by paperwork, falling months behind. The idea was to freeze ownership of company shares in one place. Now, when Apple or Microsoft look at their share register they see only the Depository Trust Company. When trading occurred, brokers would now transfer shares among accounts at the trust company. The brokers hold the shares on behalf of customers who were the ultimate beneficial owners. The result was that the Wall Street firms could now more easily track shares by having to deal only with themselves and the Depository Trust Company. Companies were taken out of the process. Because shareholders are actually only beneficial owners, lots of odd things can happen. For example, instead of executing a trade in the market, a broker may just transfer shares among clients and mark the trade as a sale. (The broker is still required by the Securities and Exchange Commission to get the best price.) Alternatively, if a person wants to short a stock by borrowing it and selling it in the market — betting that the stock price will drop — the broker may “lend” your shares without you knowing it. These issues have been brought to the forefront by the Dole case. In the settlement, 4,662 people and entities claimed 49,164,415 shares at $2.74 per share. There is just one problem: Dole had only 36,793,758 shares outstanding. These are probably not false claims. They go directly to the problems with the share ownership system. The first problem is that the Depository Trust Company sometimes doesn’t keep track of shares. When this happens, it puts a “chill” on the shares, meaning that it stops tracking them because of established procedures for the final three trading days up to the closing of a merger. Instead, the money in a merger is simply paid to the brokers who are supposed to filter it down to the investors. Usually this works, but apparently in the Dole buyout, there may have been some problems with this process. The bigger problem, however, is the shorting issue. Normally, when someone shorts shares, they borrow them and then sell them. When the short position is closed, the investor buys back the shares and restores them to their lender. In a merger, the shorting party simply pays the merger consideration. There seemed to have been many shorts in Dole. Expectations that the company would obtain a higher sale price lifted Dole’s shares above the terms of the buyout offer. Other investors were apparently skeptical that would happen, and more than 2.9 million shares were shorted on the last day that the trust company tracked the trading of Dole shares. How to deal with this was the subject of the opinion in the Delaware court case. Essentially, the judge threw up his hands, saying that the plaintiffs could pay the brokers their money and be done with it. For good measure, the judge, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery, noted that “it bears noting for future merger cases that the problems raised by short sales and trades during the three days before closing appear endemic to the depository system and hence likely infect every claims process.’’ In other words, this happens every time. It became a problem in the Dole settlement only because with so much money being paid out, more shareholders than usual took the trouble to submit a claim. But there is not enough money. When short sellers borrowed shares they sold them to other shareholders in the market. Under the ruling, those third parties who unknowingly bought shares that were shorted will now not be paid. Instead, the holders of the shares that were lent out will be paid. Those who bought shorted shares will be left to look to the shorters. The investors who shorted the stock did so expecting to make a few cents a share: the difference between where Dole had been trading above the buyout price and the price just before the deal closed. Now, they could be on the hook for millions of dollars — if they can be tracked down. And that is a big if. The Dole settlement highlights that as our capital markets become ever more complex, share trading and ownership are getting harder track. But in an age when computing power is cheap, why can’t we keep track of shares? Matt Levine of Bloomberg View, noting that the 40-year-old system “is starting to show its age,” has suggested that blockchain technology could be the answer. But is that really necessary? The system might be fixed just by adding some computing power to better trace shares. Of course, this would require the people who control the plumbing of the markets to invest millions and millions of dollars in improvements. Alas, there is no profit to be made on an upgrade. This is an area where the nation’s chief market regulator, the Securities and Exchange Commission, needs to step in. But even this will not solve the shorting issue. When you sign up with your broker you are signing up to short shares, whether you like it or not. People are then buying shares without your knowledge. This is a problem that the brokerage firms have created, and hopefully they will fix. At a minimum, they need to stand behind the shareholders here. After all, they helped create this mess. A correction was made on April 7, 2017: The Deal Professor column on March 22, about a Delaware court case over shares of Dole Food, described incorrectly the capabilities of the Depository Trust Company, which provides clearing and settlement services to the stock market. The trust company does in fact have the ability to track the ownership of shares; it is not the case that the trust company does not track the shares because it is too hard or too expensive to do so. (In the case of cash buyouts like that of Dole, regulatory processes and practices dictate how payment is made on settled positions and unsettled trades.) When we learn of a mistake, we acknowledge it with a correction. If you spot an error, please let us know at nytnews@nytimes.com.Learn more Steven Davidoff Solomon is a professor of law at the University of California, Berkeley. His columns can be found at nytimes.com/dealbook. Follow @stevendavidoff on Twitter. A version of this article appears in print on March 22, 2017, Section B, Page 4 of the New York edition with the headline: Dole Case Illustrates Problems in Shareholder System. Related Articles: - ["Dole Case Illustrates Problems in Shareholder System"](https://www.nytimes.com/2017/03/21/business/dealbook/dole-case-illustrates-problems-in-shareholder-system.html) from The New York Times - ["Dole Food Had Too Many Shares"](https://www.bloomberg.com/opinion/articles/2017-02-17/dole-food-had-too-many-shares) from Bloomberg - ["How the 'Dole Stock Crisis' is Reigniting the Push for Blockchain"](https://www.coindesk.com/markets/2017/03/14/how-the-dole-stock-crisis-is-reigniting-the-push-for-blockchain/) from CoinDesk