Here is the scoop however...
The law says that for a broker to ALLOW NSS, the shorter MUST have cash on hand to cover that short position. The shareholders who BUY the shares on the market are NOT liable for what the broker chooses to do.
In essence, every shareholder who has shares in an account with the correct CUSPID is eligible for their equities. The T/A controls the distribution, but the broker is required to get the names of the shareholders and their holdings to the T/A.
Now, if the T/A... who controls the total amount of legit shares suddenly sees more holdings sent to them by brokers than shares available, they will go to the broker and ask, "Yo whats up?" if the broker cant equal out his buys/sells then we come to the crucial point...
The broker at this point MUST take cash/stock whatever from the entity that shorted the stock but didnt cover when changes... ie reverse splits/mergers occurred.
If the broker does NOT do this to their client, THEY are liable for the shares and/or cost.
So... the T/A and company doesnt have to go chase down the NSS... all they have to do is go to the brokers and say, FESS UP!
Once they have enough information and names (brokers), they have 3 options.
1. Have the SEC step in
2. Allow the brokers to cut a deal
3. Lawsuit
All will have detrimental consequences to us (shareholders) even if it is just time we lose. However, our delay could mean a billion dollar fiasco because in the climate of todays corporate fraud, not only would they be out cash, but probably lose their license to trade etc... etc... etc...
Of course, if the SEC tries to back the brokers who committed fraud, then a second defendant gets put on the lawsuit. (SEC), and unless a judge commits a gag order, it will be all over the press and in the spotlight that could have far reaching affects on the market as a whole.
Argonath
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