![]() Financial market experts said the push towards direct registration was unlikely to curtail this practice, because most hedge funds' collateral comes from prime brokers rather than retail brokerages. Hedge funds short shares by borrowing and selling them, hoping they will drop in value so they can buy them back for less and pocket the difference. "Retail investors have asked their broker or bank to remove their investments from the 'street name' system and into their own name, directly onto the company's share register," Conn said. ![]() Paul Conn, president of Computershare's global capital markets group, said he saw a wave of direct registration business starting in September that was driven by day traders. "There is so much going on with a stock being shorted, people started to think how can I make sure that I own it and that somebody else isn't doing anything that I don't want with it," Castillo said in an interview.Ī Fidelity spokesperson declined to comment. There, more and more investors have announced they have taken their shares out of brokerages through companies such as Computershare, arguing this will help shield them from short-selling. He said he read about the "direct registration" of shares on Reddit, the social media platform that day traders turned to this year after the meme stock trading frenzy took off. If they use their own cash, the shares are not loaned.Ĭastillo traded GameStop shares without using borrowed funds, but he still feared his shares would be lent. The 26-year-old information technology worker, who lives in the greater Minneapolis area, is among a growing number of investors in "meme" stocks - shares such as GameStop popular with day traders - who are withdrawing them from brokerages out of concern the shares will be lent to hedge funds engaging in short-selling.Ĭastillo pulled the shares out of Fidelity Investments and transferred them to his name using Computershare Ltd, an Australian stock transfer company.īrokerages have been trying to reassure investors that they only lend shares of customers who are trading on borrowed funds. (Reuters) - Jose Castillo pulled his $60,000 worth of GameStop Corp (NYSE: GME) shares from his brokerage last summer, even though he had no intention of selling them. Access to information about the investments is limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments.Create New Watchlist Create Create a new holdings portfolio Add Create + Add another position Close Any such offer or solicitation will be made only using the Confidential Private Offering Memorandum relating to the particular investment. Under no circumstances should any material on this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. All pictures shown in this document are for illustration purpose to show the type of properties that HANDS-OFF INVESTMENT invests into and are not current offerings. ![]() You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation. Nothing on this website is intended to provide tax, legal, or investment advice.
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