When a corporate or fund company restructures its shareholdings, this is called a corporate action. There are several ways a company might reorganize, including a reverse stock split.

A reverse stock split (or consolidation) is a corporate action that decreases the total number of available shares on the market by a given factor, while increasing its value proportionately to prevent any material changes.

Corporate actions are issued by the company or ETF provider and are not within Wealthsimple Trade’s control.

Keep in mind that while your current share numbers will be reduced, the stock price increases by the same amount to prevent any changes. Once the corporate action is processed — i.e. when the updated shares are issued to you — the value of the position remains the same. Once trading resumes on the new shares, the price is subject to change with market movement.

For example, say you held 10 shares of a stock priced at $1 per share for a total value of $10. If the stock underwent a 1-for-10 reverse split, you would get one new share for every 10 shares you held previously. As a result, you would hold 1 new share worth $10.

How are these reflected on Wealthsimple Trade?

Our back-office automatically updates your holdings to reflect corporate actions and no action is needed on your end. Wealthsimple Trade does not support fractional shares or the rounding up (or down) of fractional shares, so any partial shares generated by this split will be liquidated and allocated as cash.

Will I see these reflected in my account?

Absolutely — you will see this reflected on your monthly statement. Please note that corporate actions and the sale of fractional shares will not show up in your account’s activity tab.