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To: steve goldman who wrote (3822)	4/22/1998 1:24:00 PM
From: Daniel Goncharoff	Read Replies (1) \| Respond to of 12617

If you loan out the shares, you are no longer holder of record, and are not entitled to vote, even though you have economic ownership. TheGonch

To: steve goldman who wrote (3822)	4/22/1998 10:52:00 PM
From: eWhartHog	Respond to of 12617

I understand that when a shareholder's stock is lent to a short for sale that the shareholder receives an "in lieu" payment from the short equal to the dividend paid. The significance of this is that the tax treatment of an "in lieu" payment may differ from that of a dividend. I recall that several years ago the IRS proposed that "in lieu" payments received by a corporation be taxed as ordinary income and not be taxed at the lower rate of dividend income. I am unaware of the current status of this proposal, but it did provoke widespread objection. This is also an issue since a corporation can distribute assets (such as non-traded rights) which cannot be replaced by the short. Regarding voting rights attached to shorted stock, only the final long has voting rights, since only he can take delivery of a registered stock certificate. If a shareholder whose stock was borrowed wanted a certificate, the short would have to buy in or borrow elsewhere to deliver the stock to this shareholder. I have heard brokers often send out proxy material to all shareholders, since some proxies won't be returned and voting privileges will only be lost if votes returned to the broker or its representative exceed the firm's voteable long position.