Published , by Asif Khan
Published , by Asif Khan
A news post on GameStop's investor relations page has provided an update for shareholders regarding the recent 4-1 stock split dividend. The nature of the split dividend had been called into question over the past few weeks and several European investors claim to not have received their three additional shares. The company states in this article that "GameStop has already distributed the shares of common stock required for the stock dividend to its transfer agent, which has confirmed it subsequently distributed the appropriate number of shares of common stock to DTC for allocation to brokerage firms and other participants." If this statement is true, and some shareholders have not been made whole, it stands to reason that investors own more shares than actually exist. Put more simply, shenanigans.
Here's the full statement from GameStop:
GameStop Guidance for International Stockholders with Split-Related Questions
GameStop has notified its transfer agent and the Depository Trust Company (“DTC”) that some of our valued stockholders in international geographies are still trying to determine if they have received the proper stock dividend associated with the Company’s recent 4-for-1 stock split. Please note GameStop has already distributed the shares of common stock required for the stock dividend to its transfer agent, which has confirmed it subsequently distributed the appropriate number of shares of common stock to DTC for allocation to brokerage firms and other participants. We recommend that stockholders using a brokerage firm contact that firm with needs or questions. Stockholders may want to make their brokerage firm aware if they recently moved shares to the Company’s direct registered list, as we have been informed this move could impact a firm’s distribution of shares.
We appreciate your investment and enthusiasm. Although we are not able to engage with individual brokerage firms, we are monitoring this situation and will keep you informed of any relevant updates we obtain through our transfer agent or DTC.
What is interesting about GameStop's assertion in their clarification post is that just earlier this week, the German Federal Financial Supervisory Authority BaFin posted a note saying that the GameStop corporate action had been treated as a stock split and not a stock dividend by entities in Germany. Several German broker dealers claim that the Depository Trust Company (DTC) told them to execute GameStop's stock split dividend as a mere stock split. Many German GME shareholders have reportedly not received their split shares.
Interestingly enough, GameStop has already been in communication with both DTC and their transfer agent, Computershare, about the troubles of their European investors. Computershare added more confusion to this story earlier this week when they told a concerned shareholder that they processed the GME corporate action as a split, going on to delete the reply tweet and issue further clarification.
With plenty of GameStop investors directly registering their shares with Computershare over the past year and a half, the transfer agent had custody over 12.7 million GME shares before the split dividend. GameStop also noted in their post that "Stockholders may want to make their brokerage firm aware if they recently moved shares to the Company’s direct registered list, as we have been informed this move could impact a firm’s distribution of shares." The company went on to say that shareholders should be in contact with their brokers as GameStop asserts that it delivered the proper amount of shares to Computershare who in turn distributed the shares to DTC to be spread across all brokers.
GameStop says it is not able to engage with individual brokerage firms, but the company is monitoring this situation. We will also be keeping a close eye on this story as it could lead to further revelations about the true amount of shares outstanding.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Full Disclosure:
At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:
Long GameStop via GME shares
Long GameStop via GME call options