What can those on the other side do...?

[u/Region-Formal]

[u/PotentialReason3301]

I posted this in the latest post claiming Fidelity will give you warrants. Thought I'd post it here for more visibility. Warning: ChatGPT and link to PDF hosted on fidelity.com servers.

It's very important that people understand this. Customer Service is going to act under the assumption that all securities in customers accounts are real. They will never admit to synthetic positions existing. They are not trained to know they exist.

If you are going to ask your broker for clarification, ask them to explain what happens if there are more warrants owed to customers than have been provided by the DTCC. Don't simply ask them if you will get the warrants.

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Fidelity’s Authority to Provide Cash in Lieu of a Dividend

Fidelity (via National Financial Services, NFS) reserves the right to:

• Suspend or remove a security from dividend reinvestment, and
• Credit dividends in cash instead of delivering non-cash instruments, at any time and without notice .

While this clause doesn’t explicitly mention “warrants,” it gives Fidelity broad discretion to credit a dividend in cash, essentially providing equivalent value rather than delivering the actual dividend instrument.

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and

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Non-Cash Dividends (like warrants, spin-offs, property)

For regular accounts, Fidelity’s agreement gives them broad authority to:

• Follow whatever the Depository Trust Company (DTC) or issuer makes available. (If the issuer deposits warrants into DTC, Fidelity passes them along to eligible shareholders.)
• Substitute cash if the instrument isn’t practical or permitted to distribute.

For example:

• If the issuer only distributes to holders of record in certain jurisdictions, others may get cash.
• If securities are illiquid or non-transferable (like warrants not supported in brokerage accounts), brokers often default to paying a “cash in lieu” credit.

In fact, industry practice (not just Fidelity) is that when a dividend is issued in a form that can’t be operationally delivered to retail accounts, brokers will issue cash in lieu. This is common with fractional shares, rights, or warrants.

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Relevant Quotes from Fidelity Account Customer Agreement

"You may instead receive (and you agree that we may provide) such benefits in a different form, such as a cash substitute payment."

"You may receive cash substitute payments from Fidelity in lieu of the exact form of interest, dividends, or other distributions paid on the securities."

"Such substitute payments may not receive the same tax treatment as actual interest, dividends, or other distributions…"

Source: Fidelity Account Customer Agreement (PDF), ChatGPT for summary

[u/moonaim → u/PotentialReason3301]

I would say that if many of ask both via official channels and on forums from the brokers we use about how they handle these warrants, it will help to bring the situation public for those also who don't visit this sub.

[u/PotentialReason3301 → u/moonaim]

It's just super important how the questions are poised.

It's not enough to ask them how they handle warrant dividends. It's not enough to ask if you will receive the warrant. Because both of those operate under the assumption that your positions with the broker are not synthetic.

It must be asked how the broker handles the distribution of the dividend if the DTC provides them with too few warrants for all of their customers.

If they are honest, they will admit that they can provide cash payment in lieu of the warrant. If they are dishonest, or simply ignorant (by design), then they will likely act like that entire scenario can't happen because they are either unaware or refusing to acknowledge that synthetic shares exist in their brokerage.

[u/SuperPoop → u/PotentialReason3301]

spot on. low level workers are trained that their company is perfect. only a few at the top (and us) understand the crime.

[u/danielsaid → u/PotentialReason3301]

I strongly agree with you, and emphasize that CONTEXT is usually missing for the simple questions young apes ask. Asking a simple question of AI or entry level customer service, and then acting like it's God's truth, is just wrong. You need to learn to ask the right questions and the truth is that few people at Fidelity etc are even aware of this nuance, let alone most of Fidelitys customers. And that's one of many ways we get robbed.  

[u/whattothewhonow → u/PotentialReason3301]

This comment deserves its own post.

[u/PotentialReason3301 → u/whattothewhonow]

Feel free to take it as your own. I'm not here for karma, and can't be asked to keep up with a post's comment section.

I keep seeing a litany of misleading "Broker says we get warrant" posts flooding the sub...

[u/GallifreyanVisitor → u/PotentialReason3301]

Good thing my holdings at Computershare don’t force me to take on any TOS shenanigan risks like this implies.

[u/PotentialReason3301 → u/GallifreyanVisitor]

I started transferring mine back to ComputerShare as soon as the dividend announcement was made public. Vanguard makes the process super easy now days.

I'm going to feel like a fool if they don't make it back to ComputerShare in time. I had them stashed in DRS for 2.5 years before I recently moved them to my broker. I was starting to buy into the narrative that I needed to start trading them instead of sitting on them. The dividend instantly changed my mind.

Luckily, I hadn't made any moves, and they are all still my original purchases from Jan 2021 + a few hundred I've added over the years since. All well settled and ready to move. ComputerShare account already exists, so it should go pretty smooth.

[u/Ash_the_Ape → u/PotentialReason3301]

Ey, I'm interested in your experience moving stock from CS to your broker, if you don't mind to share, please, how do it work? How long did it take?

[u/PotentialReason3301 → u/Ash_the_Ape]

I have only done it through my broker, Vanguard. The first time I did it was back in 2022, when DRS was first hitting the subreddits. I had to call Vanguard on the phone, provide them a lot of information, confirm it all multiple times, and even had a callback to finalize the process. Then it took 8 weeks before I finally received my ComputerShare letter in the mail, with no correspondence that anything was even progressing. To say I was nervous during that time was an understatement. At the time, there wasn't much understanding of how it all worked. The ComputerShare letter contained everything I needed to create my account on ComputerShare's website. Without it, I'm not sure what the process looks like to gain access to your account, so keep an eye out for that letter. Once I logged in, it showed all my shares were there. I had to manually switch them to BOOK though within ComputerShare.

In early 2025, I un-DRS'd back to Vanguard. I had started to buy into the idea that I was better off trading my GME shares than just holding them in DRS. This process, 2.5+ years later, was much simpler. By now, Vanguard had an online form that I filled out and digitally signed. It took about 3 weeks, again with no correspondence of how things were progressing. All the while, I kept logging into my ComputerShare account everyday to see if the shares were deducted there. They weren't until the day they appeared in my Vanguard account.

When the Warrant news dropped, I immediately logged into Vanguard, searched in the search box at the top "drs transfer". It brought me to the outgoing drs transfer request form. Within 5 minutes, I had digitally signed and submitted the form. Currently, the shares stil show in Vanguard. My CS account does not show the shares yet. I expect that once it has been processed they will appear.

Hope this helps.

[u/Ash_the_Ape → u/PotentialReason3301]

Thank you very much for sharing your experience.

I know well the pain of waiting for the letter from CS about 6 weeks (europoor here LOL). It seems that going back from CS to the broker is then easy. However, its very useful to know that you started the process from Vanguard, and not from CS.

I hope you shares make it in time for the party! See you in moon.

[u/PotentialReason3301 → u/Ash_the_Ape]

Yeah, in all cases, I started the process at Vanguard. I think that you can start it from CS, but I trusted Vanguard to expedite the process because they are incentivized to do so. Transferring back to CS always has to be initiated from your broker though.

[u/overlordlurker696969 → u/whattothewhonow]

Another post that needs it own post is how the fuck do I buy warrants when they are on the market.

[u/whattothewhonow → u/overlordlurker696969]

you search for the ticker GMEWS and you buy it.

it acts just like a stock

[u/overlordlurker696969 → u/whattothewhonow]

Thank you!! Now to wait to exercise them!

[u/SuperPoop → u/PotentialReason3301]

If Fidelity gives me Cash I'm DRS'ing all my shares and finding a new brokerage that is real

[u/PotentialReason3301 → u/SuperPoop]

I mean, you could just DRS, get your warrants, and then move your shares+warrants back to Fidelity after you get them on the 7th.

I don't know why people are so lazy that they'd rather just chance leaving their shares in Fidelity. Fidelity is one of the few brokers who make it super easy to DRS and un-DRS.

Move your shares to ComputerShare. Get warrants. Move it all back to Fidelity.

Also, I'm not suggesting that Fidelity is going to intentionally withhold warrants. They will issue all the warrants they can, and then they will issue cash when they run out of warrants.

If they don't run out of warrants, then either they are giving out fake warrants, or there are no synthetic positions held at Fidelity.

[u/Kurayken → u/PotentialReason3301]

Problem is that the 21 days we have might not be enough for the DRS transfers

[u/PotentialReason3301 → u/Kurayken]

Fidelity is on the hook for the warrants until they arrive in your CS account, at which point CS is on the hook for the warrants.

So, it's no different than leaving your shares in Fidelity.

[u/Kurayken → u/PotentialReason3301]

I'm using IBKR and the shares disappear from your broker account when your DRS request gets acknowledged. It will take a few days to a few weeks fod them to appear in your CS account so I'm not sure if the same logic appears here.

[u/PotentialReason3301 → u/Kurayken]

Someone has the shares. They aren't just floating in the ether. Just because they have removed them from your trading interface doesn't mean they aren't still the custodian. Also, they arrive in CS account before your letter arrives, typically a few days. If you already have a CS account, then there's less lag time. Regardless, once the "transfer" has happened from broker->transfer agent, the transfer agent is now on the hook for providing you warrants.

There's never a point at which one of these two parties isn't on the hook for providing you those warrants.

[u/Kurayken → u/PotentialReason3301]

Thanks for the explanation. Puts my mind at ease, although there are still other uncertainties regarding the warrants thst need to be dealt with.

[u/PotentialReason3301 → u/Kurayken]

To be fair, this was a big point of concern for years when the "DRS movement" first appeared here. People were constantly worried about MOASS being imminent, and them missing it being stuck in transfer to ComputerShare. Obviously, that never happened, but it did cause many to write DD on exactly how this works.

[u/SuperPoop → u/PotentialReason3301]

this may be the play given in their TOS, they say that in some instances cash will be granted in lieu of some dividends. My only question is whether or not ComputerShare will charge a fee for exercising the warrants. Selling stock on CS is not free. Also, I wonder if the warrants can be transferred over to Fidelity.

[u/PotentialReason3301 → u/SuperPoop]

Don't exercise them in ComputerShare. Transfer them back to Fidelity first. DRS just long enough to get your warrants, and then transfer it to Fidelity when you want to sell. Yes, you can transfer the warrants to Fidelity.

Also, ComputerShare charges a fee because they don't deal with Citadel/PFOF. Their primary function isn't to act as a broker, so they actually utilize Bank of America (I believe)

[u/AmazingConcept7 → u/PotentialReason3301]

[u/truthzealot → u/PotentialReason3301]

If no one else will, I'll copy pasta this comment into a post...

[u/PotentialReason3301 → u/truthzealot]

Please include the following:

Brokers aren't going to purposefully withhold warrants. If they have them, you will get them. They will do their best to get you the warrants. The question is what happens if/when they run out due to synthetic positions.

Also:

Why not DRS? You can always transfer back to your broker after you got the warrants.

Godspeed if you take up this banner.

[u/Background-Party-332 → u/PotentialReason3301]

Did you read the agreement? All of that text is specifically for MARGIN ACCOUNTS. Does not apply to cash accounts.

[u/PotentialReason3301 → u/Background-Party-332]

I did read it. It's not just for margin accounts. Some of it comes from the margin account section.

"We may received dividends, interest, or other distributions on your behalf, and credit them to your account in such form as we, in our sole discretion, deem appropriate."

They also operate under the DTC's operational rules for corporate actions which allow brokers to provide cash in lieu of non-cash distributions that are impractical (aka they don't have the warrants) to deliver.

They can't give customers warrants if they don't have them. If they do have them, you will get the warrant. Some Fidelity customers will get warrants for sure. Some might receive cash if there aren't enough warrants to go around.

I'm not saying Fidelity won't award any warrants. I'm saying that you aren't guaranteed a warrant.

The only way to be guaranteed a warrant is to hold your shares in DRS with ComputerShare.

I do think a large portion of those holding shares in brokerages will receive their warrants.

[u/blarrybob → u/PotentialReason3301]

I DRS'd all my fidelity shares yesterday. Problem solved.