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Herbalife Ltd. Message Board

  • jkleaszr1 jkleaszr1 Mar 2, 2013 11:13 AM Flag

    Only way for retail long investors to prevent their discount brokerages from loaning their shares to 'shorts'......

    is to not be in a margin account and to request any of their shares in their cash account to be 'stock loan exempt'. You have to request this as it doesn't automatically happen once you go into an all cash account ( no borrowed funds to buy stock with).

    This is per my TDAmeritrade brokerage customer service account rep as of today.......

    Let all the longs on this board do our small part to help Icahn pull off a nice short cover rally for our buddy Ackman and anyone else daring to follow his lead........

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    • Cash only seems to be the case with a Schwab account. Section 11 of the Schwab One Brokerage Acccount agreement in its entirety is as follows (and there is no other reference to consenting to stock lending elsewhere in the agreement):
      "Section 11: Loan Consent. You agree that property held in your Margin Account, now or in the future, may be borrowed (either separately or together with the property of others) by us (acting as principal) or by others. You agree that Schwab may receive and retain certain benefits (including, but not limited to, interest on collateral posted for such loans) to which you will not be entitled. You acknowledge that, in certain circumstances, such borrowings could limit your ability to exercise voting rights or receive dividends, in whole or in part, with respect to the property lent. You understand that for property that is lent by Schwab, the dividends paid on such property will go to the borrower. No compensation or other reimburse- ments will be due to you in connection with such borrowings. However, if you are allocated a substitute payment in lieu of dividends, you understand that such a payment may not be entitled to the same tax treatment as may have been applied to the receipt of a dividend. You agree that Schwab is not required to compensate you for any differential tax treatment between dividends and payments in lieu of dividends. Schwab may allocate payments in lieu of dividends by any mechanism permitted by law, including by using a lottery allocation system."

      Because Schwab explicitly includes this provision that the account holder must agree to and because this is the only reference made to loan consent in the agreement, I would conclude that for Scwab cash only accounts, your stock cannot be loaned out. You just want to be certain that you specifically checked the box in the Schwab agreement that indicates the account is not to include margin (see Section 3, next post due to number of letters limitation on msg board.

      Sentiment: Buy

      • 1 Reply to tdplswm
      • 3. Brokerage Features
        A margin account allows you to borrow against your eligible securities. You can use a margin loan to purchase additional securities, to sell securities short, to obtain short-term financing or as a source of overdraft protection.
        Margin is automatically included unless you check this box. (. ). Do NOT add margin

        Sentiment: Buy

    • You should probably bump this thread every couple hours. Every long should see this and be calling in..

      Sentiment: Strong Buy

    • I am an Ameritrade customer, can you still lock up your shares and have a margin account remain in place?

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