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Posted On: 08/23/2021 7:50:24 PM
Post# of 148908
Re: HHIGambler #101278
Here is the problem of what they told you.
I will explain it by way of example:
100k shares held by you and others in margin account at brokerage.
Shorts borrow 50k of those shares and short all of them, meaning they sell them to others who now have 50k shares, as well.
Assuming all the shares were sold at your broker, rather than another broker, now your broker has 150k long shares and 50k short shares netting 100k shares total.
However, for voting, which of those 150k long shares gets to vote the 100k shares?
Can't be all of them because there are only 100k actual shares.
You can't take them away from the 50k shares bought from the shorts because no one told them they were buying short shares, they are interchangeable and indistinguishable from the original long shares. In fact, some of those original 100k shares might have been shares bought from shorts further complicating this whole analysis, but it would essentially be impossible for anyone to know the origin of those shares.
So, it would seem they have to go back to where your broker got (borrowed) the shares to short. If they are pooled, would seem that either your broker has to pick who to allocate the borrowed shares to or to prorate the shares among all of those either in a margin account or to prorate the shares among all of those in a margin account that are not fully paid.
I don't think most of the employees at the brokerage understand this and hence they give conflicting information. Probably only the margin department employees can give competent advice in this regard.
As I stated in another post, I will be contacting my broker to verify that my shares are still voting, and if not, to recall them by whatever means necessary.
I will explain it by way of example:
100k shares held by you and others in margin account at brokerage.
Shorts borrow 50k of those shares and short all of them, meaning they sell them to others who now have 50k shares, as well.
Assuming all the shares were sold at your broker, rather than another broker, now your broker has 150k long shares and 50k short shares netting 100k shares total.
However, for voting, which of those 150k long shares gets to vote the 100k shares?
Can't be all of them because there are only 100k actual shares.
You can't take them away from the 50k shares bought from the shorts because no one told them they were buying short shares, they are interchangeable and indistinguishable from the original long shares. In fact, some of those original 100k shares might have been shares bought from shorts further complicating this whole analysis, but it would essentially be impossible for anyone to know the origin of those shares.
So, it would seem they have to go back to where your broker got (borrowed) the shares to short. If they are pooled, would seem that either your broker has to pick who to allocate the borrowed shares to or to prorate the shares among all of those either in a margin account or to prorate the shares among all of those in a margin account that are not fully paid.
I don't think most of the employees at the brokerage understand this and hence they give conflicting information. Probably only the margin department employees can give competent advice in this regard.
As I stated in another post, I will be contacting my broker to verify that my shares are still voting, and if not, to recall them by whatever means necessary.
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