Sino Agro Food Inc (fka SIAF)

[RealUSA]

share hypothecation - an owner like CEO can borrow against the shares at interest, pledging the shares as collateral. The lender immediately sells the shares (even though it shows the CEO still owns them) for a profit. The CEO defaults on the loan in the end. The CEO wins (got the money via loan that isn't paid back except some small interest), lender wins (liquidates the stock and get some interest for free, sometimes gets shares below market). Only losers are shareholders.

Do we know that none of the shares that our executives are holding have been "hypothecated" which basically means they are sold even though technically they still have them (since they are lent as colleteral).

Similar thing can happen with collateral shares.


Lending can also buy back the shares at lower prices. There is a risk to the lender that the stock rallies and would have to buy back the shares.

Share hypothecation occurs when executives want to sell shares without showing a official sale.