Approximately 513 million AMC shares, known as BDRs are being traded through Brazil’s stock exchange program.
BDRs are certificates issued by a depositary institution in Brazil that represent securities (stocks) issued by publicly-held corporations with headquarters overseas.
DISCLAIMER: “The depositary institutions must be authorized by the Central Bank of Brazil (Banco Central do Brasil – Bacen) and CVM to issue BDRs. The responsibility of disclosing the financial information of the issuing foreign company lies with the depositary institution.”
You’ll find that the depositary institution that disclosed this information was CitiBank.
Welcome to Franknez.com – a fellow ape by the name of Jimmy_AMC uncovered some rather disturbing news straight from CitiBank confirming the existence of millions of AMC shares overseas.
Here’s the case study that not only proves the existence of AMC synthetic shares, but also documents the loopholes in our financial system.
What is A2MC34 BDR?
A2MC34 is the ticker symbol for AMC stock in Brazil.
A2MC34 is a depositary receipt.
One of those receipts represents 1/6th of an actual share in the NYSE.
The depositary receipts are represented by a bank account or institution, in this case CitiBank, in which they have converted AMC shares into these so called BDRs (foreign stock).
It is up to the issuer (CitiBank’s client), whether they choose to convert the BDR into actual NYSE shares or not.
“There are plenty of issuers that operate with closed books”, according to Fidelity International Trading.
This particular BDR is not a sponsored ADR.
An ADR is an American Depositary Receipt that is negotiable, meaning AMC Entertainment has absolutely no legal say or obligations to these depositary receipts.
How Does A2MC34 BDRs Affect Share Price in The U.S?
According to the Fidelity International Team, these BDRs are a separate instrument and are not going to track the pricing of a share trading in the U.S market.
AMC’s shares outstanding in Brazil are approximately 3.08 billion, via Bloomberg.
Remember, this is a completely separate entity then the outstanding shares here in the U.S markets (500 million).
AMC’s market cap is 101 billion real (Brazil) which has nothing to do with the market cap in the NYSE according to the Fidelity International Trading Team.
You divide 3.08 billion shares by 6 to calculate the equivalence of 1 whole U.S market share and you get more than 513 million U.S shares that have been converted into BDRs.
You can listen to the entire conversation between Jimmy and Matthew Connor from Fidelity International Trading below.
So, what does this mean for AMC and retail investors?
It means that about twice the float in outstanding shares was converted into BDRs offshore.
This means these shares no longer have to be covered by any institution who created them in the first place.
We need answers from the SEC and its chairman, Gary Gensler effectively.
CitiBank Is One of The Largest Custodians in The World
With $23.7 trillion in assets under custody and administration and a global custody network spanning more than a hundred markets worldwide, Citi is one of the largest custodians in the world.
As you can tell, we’re going down the rabbit hole on this one.
Now, because CitiBank provides private banking services to institutions globally, they are not obligated to let Jimmy_AMC know who exactly processed these BDRs.
You can listen to the phone conversation between Jimmy and Michael Moore, a director at Citi on his YouTube channel here.
The DTCC Approved These BDRs
I did a little bit of research as to how this process even begins.
Well come to find out, the issuance needs to go through a private custodial bank, such as Citi, then processed through the DTCC, and finally going through the custodians program to convert the underlying asset.
The DTCC approved converting more than 513 million [NYSE] AMC shares into 3.08 billion BDRs (foreign stock), essentially brushing these synthetic/extra shares under the rug from the U.S markets.
I want you to take this in for just one second…
Ladies and gentlemen, this is financial treason.
This information must reach the masses.
I urge for community leaders and influencers to speak out on this incredible matter.
The community is the only solution.
Nobody in the government will stop this.
But there are more than 4 million retail investors in this community.
Make a RUCKUS.
Related: Global Head of Operations at Citadel Has a Board Seat at DTCC
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Your sign off made my day! You best believe I’ll bring the…we all know the rest of the Wu-Tang song. -All Hail Caesar!
Who do us apes contact to hear our voices? What do we say (diplomatically)?
DTCC Client Service Contacts.
Local: 888-382-2721 / (888-DTC-CSC1) International: +1 212-855-8099
Hello Frank, how can you be sure that synthetic stocks were used as the deposit for the BDR’s?
Hi Frank, Have you seen Matt Kohr’s video about this he made a fee weeks ago? He explains he BDR system as essentially a clone of the US float which is a common practise.
Could you watch and share your thoughts on it.
Hey William! Yeah I thought this too brother until Fidelity International Team confirmed that the shares in that Brazil’s stock exchange are a completely separate entity than those in U.S. It is POSSIBLE that it could have been a mistake on Fidelity’s team member and perhaps it is indeed just a clone representation of the market here. We would need a second person to confirm to be certain.
These crooks including the DTCC…just sickening!!
Apes will prevail. There’s no challenge we cannot handle
Does this lessen the magnitude of the squeeze now, thus lowering the floor? I know it will still happen, but will it now be a lot less than before they pulled this stunt or no?
It’s possible this is only a small fraction of what really could be out there too. I am bullish on AMC and I believe this news could also potentially be a catalyst. #APESNOTLEAVING
So, what’s a response to who? Do all Apes dump Citi credit cards? There are a ton of credit card options, so easy action if everyone does it. Maybe the banks think twice about supporting this kind of crap.
No entiendo qué significa, la traducción al castellano indica que es perjudicial para los APES para todos los inversionistas minoristas, cuidado con las traducciones porque puede llevar a engaño
Hi Celso, all this means is we exposed synthetics on the grand scheme of things. Other than that, short still have to cover the real short shares + whatever synthetics are still floating around
So does this mean no squeeze?
Squeeze is still very on, short interest is extremely high and shorts have not covered. This just means we were right about their overleveraged positions. There’s still a TON of uncounted synthetics out there that still have to be covered.
So the people in Brazil buying this stock are buying synthetic shares. Therefore making them real and diluting the float. Price is going down then or maybe they’re using the money to cover the naked shorts slowly. Don’t think it’s a good idea to mess around with the Brazilians money.
Are we sure that the US custodian is actually buying the shares to hold in the custody account. The only time it would matter to them is if a Brazilian BDR owner wanted to vote the shares. Or if there was a dividend (which there isn’t). Otherwise there are no events requiring the Custodian to have the shares. Can you think of any reason why 6 BDRs could be bought and sold without a corresponding custodian share and without Citi being liable for the underlying value?
I went to vote my shares in an Irish stock managed by Citi 2 years ago where I owned ADRs (American Depository Receipts). It took 3 weeks to get permission and I received a legal proxy form with 3 (yes 3) wet signatures on it by pdf in an email. This also has the benefit that BdR purchases don’t affect the share price if Citi don’t buy a corresponding share (or already own it). This would be beneficial for
I suspect matching BDRs to ADSs is something that the banks rarely do and for very few shareholders (because most retail don’t bother to vote or think they can’t). So they can take Money for the BDRs and optionally buy the shares, being a closed book I think we may never know.
It feels illegal because it should be. How can 2x the float be allowed? Without any checks and balances the way to play this could be to buy b2mc34 and request a proxy vote for the next AGM.