I took half of my shares into physical certificate form.
I did this for a multitude of reasons.
The first one is I know that it puts more pressure on the shorts. They have less shares that they can borrow from, assuming they're not naked shorting. Even if they are naked shorting, it puts more pressure on the brokerage firm that is floating these failure to delivers otherwise known as FTD's.
Second reason is I fear if there is a huge short squeeze and the stock is going out of control and the brokerages are taking the brunt of it, I would not be surprised to see the SEC put a halt on the stock and figure out who has legitimate shares and who doesn't.
If you did not have shares in your name, they would be considered street name and you would probably end up in some arbitrations situation with the brokerage firms. I spoke to a gentleman a few weeks ago and said something similar happened to him. I wish I could remember the company. I look at so many.
The third reason is I just don't like the fact that my brokerage lends them out to be shorted. I must say that really bothers me. I do not want to give up my margin account, because it allows me when I sell something to have immediate cash. If I have a cash account I have to wait three days for settlement before I can use that money. The whole system is a scam. All accounts are opened as margin accounts unless otherwise asked for.
Brokerage houses fortune lending shares back and forth to each other through their clearing systems. Every time someone shorts the stock, they collect interest on that money while the short is being held. That is why shorting as well as naked shorting is allowed. The brokerages make so much money from these activities, and I'm sure lobby Washington to make sure this stays in effect.
The last thing I want to note is my friend today went over to
Scotttrade as per my request to pool half of his Phoenix Associates Certs from his account. Their answer was, you know we don't have to give you a certificate on pink sheeted companies. We will have to call corporate and see if we can for you. After making a phone call they agree to it, but they said tomorrow you might get a no. Pretty scary if you ask me.
