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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Arcane Lore who wrote (45762)	10/25/1999 2:14:00 PM
From: Mama Bear	Respond to of 122087

AL, well, I guess it has to be resolved some way, although that method doesn't seem fair to me at all. Thanks. Regards, Barb

To: Arcane Lore who wrote (45762)	10/26/1999 11:41:00 AM
From: Arcane Lore	Read Replies (1) \| Respond to of 122087

Some additional information on who gets to vote shares borrowed via a short sale: Though it isn't perhaps the ideal source, here is a Canadian document relating to who gets to vote U.S. short sale shares. If the document is correct, the lender loses the right to vote the loaned securities since one can vote only what is in one's "possession and control". The borrower (presumably the ultimate owner of the shares, not the short seller!) gains the right to vote the shares. In addition, since the practice arises from a NYSE rule, it is unclear whether it applies to stocks traded elsewhere - for example NASDAQ (though I believe it does). Securities Lending Practices and Regulation in the United States [80] Several years ago, overvoting in the United States was a much larger problem than it is now. At that time, the "proxy department" of brokerage firms was largely an extension of the mailroom, involved in little more than the mailing of meeting materials. In addition, brokerage firms would not take the time prior to a meeting to track loaned securities and therefore would distribute proxies that should not have been distributed -- this is in fact one main cause of overvoting. [81] In 1983, the Securities Industry Association issued a standard form agreement to be used in securities lending transactions between brokers, and between brokers and non-brokers (with banks having their own form of agreement). This standard agreement was used in the industry until early in 1994, at which time the Public Securities Association issued a standard securities lending agreement which is now commonly used, both domestically and in transactions involving a Canadian lender or borrower. [82] Securities lending transactions are recorded on the Depository Trust Company (the "DTC") books specifically as borrows and loans, whereas in Canada these transactions are recorded by depositories no differently than any other transaction. In this way, loans of securities can be tracked, and brokers are provided with two numbers -- what portion of a share position is a loan, and what portion is not. [83] The standard form agreement provides, as in Canadian agreements, that the borrower is obligated to return securities of the same issuer, class and quantity to the lender upon termination of the agreement, and that the borrower will collateralize the loan at what is usually more than 100% of the value of the loaned securities. [84] However, where securities lending agreements in the U.S. differ from those in Canada is that, until the loan is terminated, the borrower is entitled to transfer ownership to others and to vote the securities. [85] The right to vote the loaned securities is given to the borrower because of a New York Stock Exchange Rule which provides that one can vote only what is in one's "possession and control". Therefore, the lender loses the right to vote securities which are loaned because the lender is no longer in possession and control of the securities. strategis.ic.gc.ca