Why Do GME (GameStop) Investors Direct Register Their Shares?
In the early fall of 2021, the Direct Registration System (DRS) started gaining traction as a topic on investment forums. This was a result of enthusiastic retail investors losing faith in the current structure of holding their investments with brokers.
So some individual retail investors of GameStop (GME) started investigating and trying out the DRS for themselves.
What happened next?
More and more individual investors started to direct register shares in their name, and the numbers have not slowed down a year later.
As of October 30th 2022, 71.8 million GME shares were officially direct registered by well over 100,000 individual investors.
This is an unprecedented move in investing history.
But what caused such a shift?
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Removing the buy button
Jump back to January 2021, when some clearing houses and brokers deactivated the buy button for several stocks. As a result of this, many retail investors were met with a startling realization: brokers are not required to act in the best interest of their retail investor clients. Instead, they work in the interests of large institutions, who are often betting against the retail investors.
Not only that, but the larger financial institutions have no oversight thanks to them being self-regulated. So, they are able to change the rules whenever they find themselves on the bad side of a trade.
Retail investors learn how they can take back control
Cut to late summer 2021, after many retail investors read Dr. Susanne Trimbath's book Naked, Short and Greedy: Wall Street's Failure to Deliver, they learned that all US stocks and shares held with brokers are not registered in the investors name. They are actually in something called street name.
This means another institution called Cede & Co. has their name on the shares, which removes property and voting rights that should belong to the investor.
So, these individual investors decided to move their investments into the Direct Registration System, meaning no institution could force trading restrictions on them, or infringe on their rights as a shareholder. Additionally, DRS provides many other benefits such as guaranteeing protection by the SEC, preventing dark pool abuse, and preventing share lending without consent.
Wisdom of the crowd
Steadily, information was being shared between these individual GameStop investors, of their success, or lack of success to direct register their shares. This created a unique opportunity to gather information on how any individual investor - anywhere in the world - could register U.S. stocks in their name.
All the guides on this website are built from successful GameStop stock transfers, using the experience of real investors to recreate how to successfully transfer from a broker into the Direct Registration System. This access to DRS information simply wouldn't exist without these enthusiastic GameStop investors.
Investors claim their rights
What began as a handful of individual investors exploring a niche method of holding shares, has snowballed into a phenomenon of reclaiming investor rights. Since the autumn of 2021, retail investors have been direct registering over $5 million worth of GameStop shares every day, including weekends, totaling over $2 billion worth of GameStop shares a year later.
Not only that, GameStop has been including updates for direct share ownership in their quarterly reports since Q4 2021, which is the primary source for the calculations above. GameStop is the only company traded on the NYSE which releases this information every quarter.
While DRS education is clearly important for any individual investor who wants to hold stocks long-term, there is only one stock that has inspired retail investors to document and spread information about the Direct Registration System globally. Without it, the volunteers at DRSGME would never have been able to create the educational resources that the site has today.
Want to learn more about the Direct Registration System and its benefits?
The topic of investments, especially stocks, can be complicated, dry and tough. This site is here to make it more accessible and easily understandable, so everyone can learn why the DRS is the best way to protect any long-term stock position.