re. <<Since BB stocks are not held in margin accounts they can't be borrowed for shorting.>>
It is easy to become confused by two separate issues:
* having a stock that is sitting in a margin account,
* whether that stock qualifies as collateral for a loan.
A BB stock can sit in a margin account. Many people have only a margin account, and no cash account. When they buy a BB stock, it must go into the margin account. It doesn't mean that they can use it as collateral.
When you open a margin account, you sign an agreement that says, among other things, that your stock therein may be lent out. This fact may be of interest to all investors, because they may be unable to vote stock that has been lent.
re. << There was a $5 rule for shorting, too, maybe that has changed or could it have been a NASDAQ rule? >>
Many brokerages (or their clearing firms) have a house rule restricting you from executing a short sale at a price below $5. Others do not. You can rest assured that the legal departments of big (and I do mean big) clearing firms know what they are doing, and when they allow shorting of BB stocks and stocks below $5, they are not breaking the law. |
