Voting on borrowed shares
I once had a nice link to paper (I forget if it was legal of scholar) on this one, but I lost it. I will try and find it when I have time.
But it goes like this:
Bio is correct that when A lends B a share to short, and C buys it, then C has the legal vote and A has no legal vote. Very simple at this point.
The problem is that there really is no "A" here, because most shares are held in street name. Thus, E-Trade may have 70K votes allowed, with 80K shares held by their clients. So E-Trade just mails out the proxy's and hopes for the expected result that less than 70K come back.
If more than 70K come back then anybody whos shares are in a margin account can lose a vote. It is really up to E-Trade to do this (but they can not take votes aways from cash accounts).
Naked short shares could in theory provide a real problem, but the amount is so small it jus doesn't matter.
It is always correct that if you have a share in your name, or a cash account, you have a vote. Any share you buy is a voting share, it's up to you to decide to place it in a margin account and lose vting rights.
