Great job pulling this all together.
Does GameStop Allow Fractional Shares
This is heavily inspired by Consistent-Reach-152
Background
GME Certificate Of Incorporation: https://www.sec.gov/Archives/edgar/data/1326380/000132638022000080/a31-certificateofamendment.htm
- There is no mention of fractional shares
Truck Hero, Inc Certificate Of Incorporation: https://www.sec.gov/Archives/edgar/data/1648189/000119312515346140/d17828dex31.htm
- There is a mention of fractional shares
Delaware Code: https://codes.findlaw.com/de/title-8-corporations/de-code-sect-8-155.html
- If fractional shares are not mentioned in the by laws, then there are no fractional shares
JP Morgan: https://www.sec.gov/divisions/investment/noaction/2016/jpmorgan-041416-206(3)-incoming.pdf
- Fractional shares are not issued by the issuer but rather are account entries meant to represent the portion of a whole share (held by a broker or another party) that an accountholder would be entitled to (including ongoing appreciation and depreciation) if fractional shares existed and could be traded in the marketplace.
SEC: https://www.sec.gov/oiea/investor-alerts-and-bulletins/fractional-share-investing-buying-slice-instead-whole-share
- The way you buy and sell fractional shares differs between brokerage firms that provide this service to their customers.
- You may not have voting rights if you own fractional shares. Your ability to exercise proxy voting will depend on how your brokerage firm’s fractional share investing program works. Some brokerage firms allow it, with special procedures, and some firms do not allow it at all. Ask your brokerage firm whether you will have any voting rights associated with fractional share purchases.
While there have been times in the past that GameStop or what would become GameStop have issued fractional shares (ie mergers), those are one offs
Taken together, we get the following conclusions
- Only whole shares are allowed by GME
- Fractional shares are happening between the individual and the financial entity.
Did he ask you to post it? Do you have his permission to share it? He is certainly welcome here.
"There is no wrong way to hold GameStop. PERIOD. FULL STOP.
That is such a wrong statement. By now we should agree being record holder is better than a beneficial owner.
Great write up! Really informative and love the court cases as citations.
One thing to add is around the concept of anti hedging rules for executives. In the older days, executives would short against their current positions. This is part of the reason section 1259 for taxes exists https://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1621&context=wmlr
Thanks for sharing this.
"The where doesn't matter"
WOW
In 100% of the votes reviewed, one share, one vote did not happen.
This (to me) is such an important video. Thanks for sharing.
I get the pushback on it is wrong to sign up yet again for another place. The only reason I suggested it is so you can read the logs and decide for yourself how good or how bad they are. I didn't want to share my perspective on how I think they are
I am really happy with this. I think there are still some gaps, but overall, I am quite happy.
The video talk was good especially to see the commissioners talk/argue their points. I also must say, I like the staff getting to respond to questions from commissioners.
I don't think the rules are perfect, but it is a start. I am happy to see some progress in this area.
Anything that can be done to ensure compliance with the rules seems like a great thing to me. If that causes stress on the markets, then the markets were not fair to begin with.
I'd like to believe SS can get better and improve. I hope the SCC does that, but only time will tell.
Personally, I think there are some big issues that need to be addressed as resolved to splinter some of the groups.
Case Document: https://courts.delaware.gov/opinions/download.aspx?id=252690
The judge said the record holders would get paid and how beneficial owners were compensated was out of scope. They (beneficial owners) knew the risks of being beneficial owners.
There Are Not More Shares Than There Should Be
"As a result, a beneficial owner's ownership cannot be tracked to specific shares but rather its ownership interest is represented as a securities entitlement at his or her broker-dealer. Each of those beneficial owners don't own the actual shares credited to their account " https://www.sec.gov/news/speech/2007/spch101607ers.htm
There can however be more security entitlements than total shares issued by the company.
Wow, that's interesting.
One share, one vote is not something that is always true. That's a major part of the issue.
Of course you're paying for those votes. In addition, yes it's true the options expire. 0.65 cents is substantial for options?
The purpose of this is to show what empty voting is and how one could enter it easily.
How Easy & Inexpensive Is It To Buy Votes
I wanted to show a few examples with pictures to illustrate how inexpensive it can be to buy 100 votes
I am going to show pictures of each ticker with me going long 100 shares, short a call, and long a put. The call and put will be for the same strike and the same expiration. At the very end will be a summary table of upfront costs, losses/gains, and then some additional comments.
Please note:
- This assumes no early exercise, which is a risk to this.
- This assumes what is displayed on the ticket can be filled. Technically, it will not fill as optimally, but the gist of this is the key.
- This is all based on data from thinkorswim pulled around 11:30am on 3/30/2023.
Examples
TLDR Summary
- GME: for $2.4k, you can buy 100 votes and you’ll lose is $88
- Robinhood: for $1.1k, you can buy 100 votes and you’ll gain $13
- AMC: for $0.7k, you can buy 100 votes and you’ll lose $138
- Apple: for $16.8k, you can buy 100 votes and you’ll gain $194
- Microsoft: for $27.4k, you can buy 100 votes and you’ll gain $141
For 5 different tickers, this shows how you can shed some or all of your economic risk and have full voting rights. This is empty voting!