Evaluating the case for mandated DRS disclosure in US Corporate SEC filings

Daniel T. Lawson, Christopher Mueller and Henry Webb

Journal of Financial Regulation and Compliance, 2026, vol. 34, issue 5, 804-823

Abstract: PurposeThis paper aims to evaluate whether US public companies should be required to disclose the number and percentage of shares registered outside the depository trust company’s nominee, Cede & Co. It examines how the growth of directly registered, non-Cede-owned (NCO) shares affects market transparency, float calculation, liquidity assessment and short-selling dynamics.Design/methodology/approachThe study analyzes regulatory gaps in existing Securities and Exchange Commission (SEC) disclosure rules, synthesizes issuer-level evidence from recent market episodes and conducts comparative review of transfer-agent practices and state corporate-law inspection rights. It also draws on case studies – including GameStop, AMC, Express, Bed Bath and Beyond, KOSS and Trump Media and Technology Group – to illustrate how undisclosed NCO ownership affects market participants. The paper then proposes targeted amendments to Regulation S-K to standardize reporting of NCO shares.FindingsRising levels of directly registered ownership reveal a structural blind spot in SEC reporting. Because NCO shares are illiquid and unavailable for securities lending, their omission from Forms 10-K and 10-Q distorts widely used metrics such as public float and short-interest ratios. Evidence from issuers of varying size demonstrates that NCO ownership materially affects market transparency, especially when it comprises a significant fraction of outstanding shares. Standardized disclosure would improve the interpretability of market-liquidity data and strengthen investor protection.Practical implicationsMandated disclosure would enable investors, analysts and regulators to more accurately assess liquidity risk, float constraints and short-selling conditions.Originality/valueTo the best of the authors’ knowledge, this paper is the first to evaluate the regulatory implications of NCO share disclosure and to provide a concrete, administratively feasible framework for integrating NCO reporting into existing SEC rules.

Keywords: Direct registration system; DRS; non-Cede ownership; Shareholder disclosure (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-12-2025-0416

DOI: 10.1108/JFRC-12-2025-0416

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