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Post by straightly on Jun 29, 2017 0:53:05 GMT -5
1. What happened to these people who loaned out their shares? 2. What happens the naked shorts? And the fellow who bought the naked shorts? 1. A shareholder retains all attributes of ownership during the loan period. The borrower has to return to the entity making the loan exactly what was loaned out thus they are responsible for returning any dividends paid, split shares, or rights that accrue during the loan period unless the agreement says otherwise. 2. A naked short has to sell the shares to a broker, and that broker will expect the same as with a bona fide loan. Ultimately, the person shorting has to deliver exactly what they sold including subsequent dividends, split shares or rights that accrue. Overall, the rules of the game are pretty fair and there are not nearly so many naked shorts as you might think. Yes there are fails to deliver on T+3, but most of those are just delayed for some reason and they clear T+4 or T+5 without further action. Since the broker is ultimately responsible for returning the shares to their client, they will force a buy-in if the delivery is delayed too long. Thanks to matt and sports. Good info and explanation. I also do believe that this will not happen. The only experien] 00ce I had with rights offering was a company adapted a poison bill which totally stopped a potential buyer, which actually messed up the "small holders" like yours truly.
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