Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Casavant Mining Kimberlite International (CMKM) -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (2161)	6/14/2006 4:35:59 PM
From: StockDung	Read Replies (1) \| Respond to of 2595

THIS IS INTERESTING. THE LENDING OF SHARES OVER AND OVER AGAIN APPEARS TO BE LEGAL. I HAD THOUGHT THAT THERE WAS A LOOPOLE WHEN THAT HAPPENED IN GENIE SHARES. WHAT APPEARS TO NE NOT LEGAL IS MORE THAT ONE VOTE FOR THE LENT OUT SHARES. "Here's how the situation can arise. A broker lends a client's shares to another buyer, usually a short-seller. That person then sells the shares to a third person, whose broker lends the shares out anew. And so on. In theory, the dividend and voting privileges associated with the stock devolve to only one person -- its physical owner, or the last person on the daisy chain. In practice, however, the situation can be cause problems in proxy votes." ============================================= NYSE Fines Firms in 'Over-Voting' By Lauren Rae Silva TheStreet.com Wall Street Reporter 6/13/2006 1:15 PM EDT Click here for more stories by Lauren Rae Silva What happens when many investors think they own the same share of stock? Fines. The New York Stock Exchange said Tuesday that it fined three brokers for record-keeping violations that led to so-called over-voting in corporate elections. UBS (UBS:NYSE - news - research - Cramer's Take), Goldman Sachs (GS:NYSE - news - research - Cramer's Take) and Credit Suisse (CSR:NYSE - news - research - Cramer's Take) were fined a total of $1.35 million for "operational deficiencies and supervisory violations concerning the submission of proxy votes," according to the NYSE. "Inadequate processing and supervision of customer proxies undermine a fundamental principle of stock ownership," said Susan L. Merrill, chief of enforcement, NYSE Regulation. "I remind member firms that they must ensure that shareholders' votes are not threatened by inattention, careless systems or insufficient reviews, and that outsourcing of the proxy function does not lessen a firm's responsibilities." Over-voting, in which more shares than exist are voted in a corporate ballot, has been linked to certain excesses of short-selling. Although this case doesn't specifically state that the fines were related to shares lent for short sales, the two issues often coincide. Here's how the situation can arise. A broker lends a client's shares to another buyer, usually a short-seller. That person then sells the shares to a third person, whose broker lends the shares out anew. And so on. In theory, the dividend and voting privileges associated with the stock devolve to only one person -- its physical owner, or the last person on the daisy chain. In practice, however, the situation can be cause problems in proxy votes. In particular, brokers run into problems when they don't tell the original owner he doesn't have his voting rights anymore. That person then casts votes in a proxy vote, as does the end owner. If more votes than shares are submitted, the NYSE knows something is amiss. In this case, UBS Securities, Goldman Sachs Execution and Clearing and Credit Suisse Securities were fined for improper book keeping with regard to the share ownership. UBS will pay $600,000, Goldman will pay $500,000, and Credit Suisse owes $250,000. ===================================================== Three Securities Firms Fined Over Handling Of Clients' Proxy Votes By a WALL STREET JOURNAL Staff Reporter June 14, 2006; Page C3 NEW YORK -- Three Wall Street firms were fined a total of $1.35 million by the New York Stock Exchange's regulatory arm for problems related to their handling of clients' proxy votes. The fines were handed down by NYSE Regulation, a unit of NYSE Group Inc., against units of UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group. They were respectively fined $600,000, $500,000 and $250,000. NYSE Regulation censured and fined the firms "for operational deficiencies and supervisory violations concerning the submission of proxy votes.'' A spokeswoman for Credit Suisse and a spokesman for Goldman declined to comment. UBS said it "takes its obligations seriously" and that it "has taken steps to prevent over voting from occurring in the future." According to NYSE Regulation, the firms submitted more votes to proxy tabulators than they were supposed to. "Inadequate processing and supervision of customer proxies undermine a fundamental principle of stock ownership,'' said Susan Merrill, NYSE Regulation's enforcement chief. "I remind member firms that they must ensure that shareholders' votes are not threatened by inattention, careless systems or insufficient reviews, and that outsourcing of the proxy function does not lessen a firm's responsibilities." URL for this article: online.wsj.com