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Rubicon Technology, Inc. Message Board

  • ldk139 ldk139 Feb 18, 2011 3:31 PM Flag

    Stop your shares from being lent to short seller

    Please do not just complain about short selling.

    You need to do something about it, so as to stop your shares from being lent to short sellers.

    How ? If I had shares, I would Just put a GTC sell order in place at a desired price, say, $35, $34, $32,etc
    and then inform your broker in writing that your shares are unavailable to be lent out to short selling.

    This is personal view for discussion only. you must consult your adviser and not be influenced by this posting.

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    • The GTC order ploy just doesn't work.

      Shares of stock are fungible (interchangeable). Shares that are available to be loaned to others are kept 'in bulk', i.e. collectively.

      If you sell shares of stock that have been loaned to a short seller, then your broker can either replace those shares with shares owned by someone else or can borrow them in the stock loan market to make delivery of the shares you sold. If your broker can't obtain shares elsewhere, then he will tell the short seller to buy them in and they will be returned/credited to your account.

      If you don't want your shares to be loaned to short sellers, then buy and hold them on a fully-paid "cash basis". As such it would be illegal for your broker to lend them to anyone. Alternatively, if you were able to revise the standard margin agreement of your brokerage firm to delete the provision permitting your broker to borrow and relend your shares in a manner consistent with SEC rules, your broker would have to treat your shares as fully-paid and segregate them. Otherwise, if you have a margin debit balance in your account, your broker may lawfully borrow and relend shares having a market value of up to 180% of the debit balance.

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