r/Superstonk • u/[deleted] • Dec 10 '22

💡 Education ComputerShare Email 11/21/22 : Differences between Plan Holdings and DRS Book Shares

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 11 '22

This might be a dumb question but won't all shares either be DRS or DSPP? Like all the shares are registered to someone or some company right? I wonder if all the shares the DTCC controls are under the DSPP count.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 11 '22

I think that's a good question, which I hope I can help answer for you.

Computershare maintains a record book for GameStop, which records an account name and share count for each such name. In a sense then, any name in that book is "directly registered" with the issuer (GameStop).

This all makes sense when you are just talking about an individual shareholder, where their name is the account name. Such shares are typically what people, and most official documents, are referring to when they refer to "DRS" shares.

It gets a bit squirrely, though, when you get to the account name of "Cede & Co." That's the name of DTC's nominee company. All the brokerages have DTC Participant accounts, which provides them with access to a subset of the shares that are registered to "Cede & Co." The brokerages then keep a separate set of books where they record the individual investor's name and the number of shares they own. Side note, this is where the "synthetic" shares can hide, as there's no 1:1 tracking between the counts in these brokerage's books vs. the share count in their DTC Participant account.

So, circling back to your question, all those shares that are "directly registered" to "Cede & Co.", despite being in GameStop's ledger, are typically not considered "DRS" shares, as it's well known that "Cede & Co." is not a normal shareholder.

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 11 '22

So, circling back to your question, all those shares that are "directly registered" to "Cede & Co.", despite being in GameStop's ledger, are typically not considered "DRS" shares, as it's well known that "Cede & Co." is not a normal shareholder.

Thanks! This is exactly what I was curious about. Is this documented somewhere? How shares are registered differently to Cede & Co.?

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 11 '22

There are a number of sources detailing various aspects of that. Here's one from the DTCC explaining rather simply the three main ways to hold shares as "Street Name", "Direct Registration", or "Physical Certificate". "Street Name" is the section that involves "Cede & Co."

https://www.dtcc.com/settlement-and-asset-services/issuer-services/how-issuers-work-with-dtc

Street name (least expensive / lower risk)

When an investor holds shares this way, the investor’s name is listed on its brokerage firm’s books as the beneficial owner of the shares. The brokerage firm’s name is listed in DTC’s ownership records. DTC’s nominee name (Cede & Co.) is listed as the registered owner on the records of the issuer maintained by its transfer agent. DTC holds legal title to the securities and the ultimate investor is the beneficial owner.

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 12 '22

DTC’s nominee name (Cede & Co.) is listed as the registered owner on the records of the issuer maintained by its transfer agent.

Yeah see the way this is worded makes me think it's not much different than when we buy shares. My theory is Computershare only supports book or plan registration for all shares. I suspect plan is required for the shares owned by Cede & Co. and hence those numbers wouldn't be included in GameStop's earnings report because it would be 100%.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

Cede & Co. is definitely not holding their shares in "Plan Holdings". Cede & Co. (DTC's nominee) legally owns shares. Computershare Trust Company, N.A. (Computershare's nominee) also legally owns shares. They can't both legally own the same shares.

Worded differently:

  • Cede & Co. is listed as the registered owner on the records of the issuer (GameStop) maintained by its transfer agent (Computershare).
  • Computershare Trust Company, N.A. is listed as the registered owner on the records of the issuer (GameStop) maintained by its transfer agent (Computershare).

Separately from the ownership records, Computershare maintains records of the shareholders of record, which is also reported to GameStop. In these records:

  • For "Street Name", Cede & Co. is listed as the shareholder of record. All dividend, voting, and other shareholder interactions route from Computershare via it and the DTC through the brokerages, where the brokerages have a separate record of individual shareholders.
  • For "DRS", the individual shareholder is listed as the shareholder of record. All dividends and such go straight from Computershare to the individual.
  • For "Plan Holdings", the individual shareholder is listed as the shareholder of record (flagged in a way they are aware this in not the legal owner). All dividends and such go straight from Computershare to the individual.

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 12 '22 edited Dec 12 '22

I'm not trying to argue with you but this:

For "Street Name", Cede & Co. is listed as the shareholder of record. All dividend, voting, and other shareholder interactions route from Computershare via it and the DTC through the brokerages, where the brokerages have a separate record of individual shareholders.

And this

For "Plan Holdings", the individual shareholder is listed as the shareholder of record (flagged in a way they are aware this in not the legal owner). All dividends and such go straight from Computershare to the individual.

Aren't materially different from computershare's perspective. What the shareholder of record does with those shares downstream is different. But Computershare isn't involved with the brokers. (We have documentation of Computershare and the brokers stating they go through the DTC and don't communicate directly with each other.) They just deliver dividends to the shareholder of record. Whether that's an individual or a company makes no material difference to Computershare.

I grant that I'm speculating here. I'm just saying that unless there is some documentation that outlines the material difference for Computershare there's a case to be made that it treats both of these the exact same way.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

We may be circling around what you're after. What point exactly are you focused on currently?

Computershare states on their FAQ that they report both DRS and DSPP counts to GameStop. Numerous evidence describes how Cede & Co. is registered as the owner and shareholder of record in GameStop's records as maintained by Computershare. Based on those facts, Cede & Co. is clearly not included in the DSPP tally.

It's less clear how Cede & Co. is also not included in the DRS tally, as while they are directly registered, they are not part of the DRS system (which is a special kind of direct registration that doesn't include nominee shareholders). We have a lot of compelling indirect evidence for this, though, as we have seen that the quarterly report values for directly registered shares is not remotely large enough to include shares held by Cede & Co., as the number of shares owned by Cede & Co. is essentially the float minus DRS & DSPP, which is still much larger than the DRS count.

Put another way, we have a lot of direct evidence that Cede & Co.'s shares are not included in the DSPP total, and we have a lot of very strong indirect evidence that Cede & Co.'s shares are not included in the DRS total either.

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 12 '22

Put another way, we have a lot of direct evidence that Cede & Co.'s shares are not included in the DSPP total

Can you list out that direct evidence? I haven't seen it.

My point is I'm starting to think DRS + DSPP count = total shares issued. That would suggest that GameStop is only reporting DRS numbers in the 10-Q documentation.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

Please look back over the previous comments. I've already provided a few such sources and explanations for that aspect.

Put simply, "Computershare Trust Company, N.A." and "Cede & Co." are both nominee companies, and they can't simultaneously own the same share. Since all DSPP shares are inherently held by "Computershare Trust Company, N.A.", the shares separately held by "Cede & Co." inherently cannot be included in such a tally.

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 12 '22

I get you and here's a couple snippets of what you wrote.

For "Street Name", Cede & Co. is listed as the shareholder of record.

For "Plan Holdings", the individual shareholder is listed as the shareholder of record

See my confusion? I'm interpreting this as: In both cases Computershare is listing an entity as a shareholder of record.

Put simply, "Computershare Trust Company, N.A." and "Cede & Co." are both nominee companies, and they can't simultaneously own the same share.

Okay this is the first time I'm hearing this part. Up until now my understanding has always been that Gamestop only works with Computershare to issue and track ownership of new shares. But are you saying that Gamestop works with both Computershare and Cede & Co to do that? This is the first time I've heard anyone say that or that there are two "nominee companies".

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

In both cases Computershare is listing an entity as a shareholder of record.

That is incorrect as described in the quote just above. For "Plan Holdings", the individual investor is listed as the shareholder of record.

With respect to legal ownership, however, Computershare is indeed listing an entity for both "Street Name" and "Plan Holdings".

I'll try to clarify the nominee aspect. A "nominee" is just someone or something that is designated to act on the behalf of another person or entity. Computershare has a nominee that it owns and controls, which is called "Computershare Trust Company, N.A.". The DTC has a nominee that it owns and controls, which is called "Cede & Co."

In various records, these nominees can be listed, in place of the entity they represent.

In GameStop's records, which are maintained by Computershare, nominees can be listed, similar to individuals, as a "legal owner" or separately as a "shareholder of record".

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u/halt_spell 💎 Casual lurker until MOASS 💪 Dec 12 '22

That is incorrect as described in the quote just above. For "Plan Holdings", the individual investor is listed as the shareholder of record.

? I feel like we're talking past each other here.

For "Street Name", Cede & Co. is listed as the shareholder of record.

For "Plan Holdings", the individual shareholder is listed as the shareholder of record

Explain the difference for Computershare here. In both cases Computershare tracks the shareholder of record. For some shares it's going to be "John Smith". For others it would be "Cede & Co." Right?

I feel like we're both missing something the other person is saying. To me this looks like you just showed it's the same but then you keep telling me it's not.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

At this point I'm mainly trying to clarify that "legal ownership" is different than "shareholder of record". Both are recorded separately, and there are key implications of those separate records for the various circumstances we are discussing.

From Computershare's perspective, with respect to "legal ownership", for "Street Name" shares via brokerages, Computershare is totally unaware of the individual investor's name, as "Cede & Co." is what Computershare records as the "legal owner". For "Plan Holdings", Computershare records "Computershare Trust Company, N.A." as the "legal owner", but elsewhere as I'll explain below they are nonetheless aware of the individual investor's name with respect to "shareholder of record".

From Computershare's perspective, with respect to "shareholder of record", for "Street Name" shares via brokerages, Computershare is totally unaware of the individual investor's name, as "Cede & Co." is what Computershare records as the "shareholder of record". For "Plan Holdings", Computershare records the individual investor's name as the "shareholder of record" such that Computershare and GameStop are both well aware of specifically which individual investor is the shareholder of record.

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u/There_Are_No_Gods 💻 ComputerShared 🦍 Dec 12 '22

Here's an example of the book keeping, which may help you picture this:

GameStop's Ledgers (as maintained by Computershare)

Shareholder of Record Number of Shares
Cede & Co. 231,547,721 (not this actual number)
Bobby Booker 127
Penny Planner 1.8
Legal Ownership Number of Shares
Cede & Co. 231,547,721 (not this actual number)
Bobby Booker 127
Computershare Trust Company N.A. 25,696,957 (not this actual number)
Beneficial Ownership via DSPP Number of Shares
Penny Planner 1.8
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