Wave Systems Corp. (fka WAVXQ)

[rwk]

AZWaveman / at least one of

the points in the article is incorrect.

The author wrote:

There is another problem with short selling: the short seller is allowed to vote the shares at shareholder meetings. To avoid having to reveal what is going on, stock brokers send proxies to the “real” owners as well; but that means there are duplicate proxies floating around.


The way it works is the person who buys the shares from the short seller is a legitimate owner of shares and gets to vote the shares they bought. The short seller has to borrow shares from someone in order to deliver into their short sale. The short seller borrows the shares through a broker from someone who is on margin. If that person has a margin account with the shares in question, then their broker is allowed to lend these shares to the short seller for deliver to the purchaser.

What should happen is the margin player loses their vote on the shares in favor of the person who unknowingly bought the shares from the shorter. Or if you insist on claiming an equal right to vote, then the total votes have to be prorated.

The point is the "short" never gets a vote.