Saturday, August 07, 2021 5:14:22 PM
Unfortunately that's a myth repeated on a lot of boards, but don't take my word for it. Ask your broker. If you have a high sell order, your broker can still lend your shares to the shorts. If the stock rockets, the broker is obligated to replace the shares.
To lock your shares, ask your broker for a Loan Exempt Restriction (term varies by broker) if you have a margin account. Cash accounts N/A since it's illegal for brokers to lend securities from cash accounts but some brokers try to get away with it (ask for a link).
Many people aren't aware that their broker can lend an investor's shares to market makers, hedgies, and other professional shorts for the sole purpose of shorting the bejeezus out of their stocks. It's simply one more tool to manipulate a particular stock.
Lending securities is a huge business. Search. Even the clearing houses are in on the act, but there's so much money involved, the broker-dealers take pains to keep it under the radar.
Why is it worth spending a few minutes to ask for a Loan Exempt Restriction?
As a retail investor you've done your DD and in good faith, trusted your broker to execute your trade. Broker then turns around and lends your shares to professional shorts who use your OWN shares to work AGAINST you.
Incredibly sweet deal for the broker. He has NO money at risk since you're essentially the bank AND he earns money on your shares by lending them to the shorts.
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