This one is for the GameStop die-hards.
In brief: the people who are still in GameStop believe there are significantly more shares in existence then are legally allowed.
To prove their thesis, and to dry up liquidity in the stock, they have started direct registering their shares to take it out of trading, prevent it from being loaned out by their brokers, and also force brokers to actually buy the share (since it’s technically possible your broker never buys the shares you buy through them, but instead gives you an IOU of the shares).
How Buying Shares Normally Works
When you buy share through a broker-dealer (e.g. Schwab) they are in held in name of the broker, with you as the beneficiary. Normally that’s fine. However, if you believe shares of your stock are about to incredibly illiquid, and you fear the broker preventing you from buying more of that stock at a later date (which is exactly what Robinhood did) then you might want to take control of the shares yourself.
For the Bitcoiners out there, this is the same idea as holding your sats on an exchange instead of transferring them to your own wallet.
How Direct Registration of Shares (DRS) Works
From any American broker-dealer that currently has your shares, you can simply call them up and request a transfer of your shares to Computershare (which is registrant and issuer for GameStop and other companies, like AMC).
They legally have to transfer these shares. Don’t allow them to charge you a fee for this. If they try to, complain. Or just transfer them (fee-free) to Fidelity, who will then DRS your shares for free.
DRS from your IRA
Unfortunately, if you’re holding shares in an IRA, the process isn’t so simple. It can be considered a taxable event to DRS. I’m not sure why. But this is an issue since a lot of people have the bulk of their savings not in their individual accounts, but in retirement.
There is a solution.
By creating a self-directed IRA, you can transfer assets you own into your self-directed IRA and complete the same process. The downside is more paperwork to manage (but a financial advisor can help with this, which you should definitely look into if you want to go this route, anyway).
- Hire a financial advisor on a flat-fee basis (not a percentage of assets)
- Have them help you set up a self-directed IRA
- Transfer shares from your traditional IRA into your self-directed, and then direct register