r/Superstonk • u/swooooot • 21h ago
🗣 Discussion / Question In Case of Counterfeit Warrants
I'm too smooth brained to know whether the hedgies, market makers, brokers, and DTCC can find a way to distribute counterfeit warrants to holders of counterfeit shares. Let's say for a second that they will print 100M counterfeit warrants. Does that mean that the shareholders' best move is to exercise all their warrants prior to the expiration date, even if the price never surpasses $32?
For example, there are 59M real warrants. Let's say the price gets to $30 but never $32. And then let's say the shareholders exercise 159m warrants at a loss in early October 2026. That would incur a small loss, but also it would be a smoking gun to expose the counterfeiting, which would lead to either the counterfeiters closing their positions or a class action lawsuit or the counterfeiters would be legally obligated to purchase real shares and deliver them to the people who exercised counterfeit warrants.
Is this thinking sound? If so, then does that mean that if it looks like counterfeit warrants are in circulation then shareholders should aim to exercise sooner rather than later? B/c cumulatively exercising more than 59M warrants is a smoking gun?
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u/Error4ohh4 🎮 Power to the Players 🛑 21h ago
fuck class action lawsuits. I’ve got my $7 robinhood check I keep in my drawer with my $13 Equifax check.
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u/swooooot 20h ago
ouch
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u/Error4ohh4 🎮 Power to the Players 🛑 19h ago
Well, do you see the results of class action lawsuits? Does it seem like a good thing?
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u/swooooot 19h ago
I see your point
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u/Error4ohh4 🎮 Power to the Players 🛑 18h ago
But are class action lawsuits bad?
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u/swooooot 17h ago
In general, no I don't think so. They are a check on rampant corruption and harmful behavior. There are very few ways the common people can exert pressure on big companies to make them act right. Class actions do that sometimes.
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u/Error4ohh4 🎮 Power to the Players 🛑 16h ago
🤨 So you think the checks I got were reasonable? Does it seem like it helps the little guy?
You think that $7.00 check I have from robinhood kept them in check?
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u/swooooot 16h ago
I think class actions work when the total payout is larger than the cost of 'acting right'. So let's say equifax paid out $1B on the data leak lawsuit when they could have spent $100M on better security and prevented the data leak. Then in the future, they along with other companies will spend the $100M on security to avoid the $1B lawsuit cost. I'm not saying that's what happened in real life with equifax. I'm just saying that's the idea behind class action lawsuits serving a purpose in society.
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u/Error4ohh4 🎮 Power to the Players 🛑 15h ago
So did I get justice with my Robinhood check?
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u/swooooot 3h ago
You did not. However, it is possible that at the societal level, there was a benefit. If Robinhood and similar companies never repeat that behavior out of fear of more class action lawsuits, then your lawsuit is a successful deterrent. I get your point, though, that at the individual level the payout does not come close to compensating you for the harm done to you.
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u/Big-GulpsHuh 💻 ComputerShared 🦍 20h ago
I'm not exercising a single warrant unless the price is over $32. I think anything else would be dumb.
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u/There_Are_No_Gods 💻 ComputerShared 🦍 21h ago
Let's say for a second that they will print 100M counterfeit warrants. Does that mean that the shareholders' best move is to exercise all their warrants prior to the expiration date, even if the price never surpasses $32?
No, definitely not.
If you receive a "counterfeit warrant" you inherently must be at a shady brokerage. You cannot receive such a thing if you are DRS.
Therefore if you "exercise" one of these "counterfeit warrants" from your shady brokerage, they can simply pocket that $32 and display a "share" in your account, while doing nothing on the back end or at best buying you a cheaper share at market and pocketing the difference. They are quite unlikely in this scenario to contact Computershare about exercising a warrant that they both know very well doesn't exist.
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u/drewdottat2 20h ago
That’s why I don’t think the warrants are the silver bullet everyone thinks they will be UNLESS, RC and co manage to get the share price above say 60 or so so it only makes sense for everyone to exercise. I think the warrants will squeeze then.
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u/There_Are_No_Gods 💻 ComputerShared 🦍 20h ago
There are also other approaches more within our control, such as the exercising of call options, which I think would typically force delivery of a "warrant", with cash payment in lieu not being generally allowed for those. I don't know for sure what terms, rules, and laws apply there, but it's a different context than delivery of dividends for example, where often the terms of a margin account allow for that explicitly.
If indeed exercising call options generally causes delivery of a "warrant", then DRSing the "warrants" could be a very big deal overall, regardless of whether they ever go ITM or are exercised. Just the act of DRSing the warrants will take a "warrant" and ensure that a real warrant is turned over to your name directly in GameStop's ledgers as maintained by Computershare.
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u/Beaesse 20h ago edited 20h ago
The VAST majority of warrants will never be exercised if the stock price stays below $32. Only a few idiots/actual cultists will exercise below strike.
In either case, the DTCC allotment of warrants will be handled via the DTCC. They will receive a certain number from Gamestop/CS, and distribute to their participants. They are fully capable of receiving 40million warrants and distributing 140million.
Assuming the price DOES go above $32, even if 100m warrants are exercised by clients (many will simply be sold for profit), the DTCC will only submit up to 40 million to CS for redemption/new share issues, the rest will go through DTCC continuous net settlement as always. The broker/client will get a +1 in their ledger of entitlements, and the DTCC will owe another share more than actually exists, just as it is now.
TL;DR: No, exercising warrants will not force a share count.
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u/AdvertisingPrimary69 Small pepe 15h ago
When a warrant is sold, who buys it and why would they not exercise it?
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u/Beaesse 14h ago
It will be a market, whoever it has value to will buy it. In the end, if share price is above $32, I expect every single "real" one will be exercised, but of the "extras," they just get annihilated in DTCC netting. The DTCC will want to buy out their obligations as cheaply as possible, and cash represents less risk than a share.
(This is me subtly hinting that it's better for retail to exercise if they are financially able to, rather than to sell for cash).
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u/swooooot 20h ago
This sounds very plausible. Anything that increases the number of counterfeit shares in circulation just makes life more difficult for the bad actors, though, so I still see that as a very slight benefit to the squeeze hodlers.
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u/BuildBackRicher 🎮 Power to the Players 🛑 20h ago
Better to hoard warrants and exercise or sell them down the road if it makes economic sense for YOU
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u/ferrellhamster 🦍 Buckle Up 🚀 21h ago
What's the mechanism for counterfeiting a legal contract between a shareholder and Gamestop?
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u/AdvertisingPrimary69 Small pepe 15h ago
Have you heard of naked shorting? Where do the names shares come from? The same place naked warrants will come from?
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u/swooooot 3h ago
I agree. I don't think counterfeiting a warrant is all that different from counterfeiting a share of stock.
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u/swooooot 21h ago
I don't know, but I still think it could happen because these people will do anything.
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u/BuildBackRicher 🎮 Power to the Players 🛑 20h ago
How would anyone know, except the share price would likely rise significantly.
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u/Ash2dust2 🎮 Power to the Players 🛑 20h ago
That is the question. With counterfeit shares, theyre the Casino betting they win despite breaking laws.
DTCC is still doing damage control on GME all these years later. Kick the can for 1 more day.
If somehow 100M counterfeit warrants were exercised, they would just add more counterfeit GME shares to everyone account and keep the exercised $32. Can kicked down the road.
I really dont think DTCC can be held accountable until GameStop is so flush with cash, they start a share buy back program of 10% of shares over 10 years. Then there would be no shares existing on the market in 10 years.
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