FHM,
Despite all your pontificating, you are generally incorrect on most of your points.
Investors do NOT have to create a separate account in which to hold fully paid for securities; they keep their account number and change only the account "type". 1234-5678 type 1 is an example of a cash account, 1234-5678-2 is an example of a margin account, 1234-5678-4 is a "when-issued" account and 1234-5678-6 is a "short" account. All have the same number but the types are differentiated by the appendage at the end.
Accounts are opened as cash. The cash account agreement is what's initially signed. It takes a specific signed margin account agreement to create the margin account. You cannot have a margin account without first creating the cash account. And, yes, you can call your broker and request via phone that securities held in the margin account be journalled to the cash account. The only restriction would be if the movement of those shares, and its subsequent reduction in "funds available," triggers a margin call.
Last, when you deal with larger retail firms, clients aren't compensated for the lending of shares. They don't even realize their securities have been lent. If there's any compensation, it's to the lending broker-dealer from the borrowing broker dealer. Securities Lending firms, asset managers with large positions, and sometimes large pension funds will also lend stock in their portfolios to generate interest income. In 35 years on Wall Street, I've never heard of this practice with small investors at the retail level.
btw, I see your Home Solutions of America hit a new low today.
