If I remember correctly, if you own stock in your cash account, no, they can't (or usually don't) lend it out. On margin accounts, yes. When you sign a margin agreement with most brokers you sign over to your broker the "right of hypothecation" or "right of substitution". I don remember what it's called exactly, but it allows them to lend your stock. People get concerned about their stock being lent out needlessly, IMHO. Yes, it gives shorts the ammunition to put on a short position, but when those same shorts are forced to cover it provides a powerful buy pressure to the stock. I don't use a margin account anymore. Learned a valuable lesson back in 2000 when the NAZ crashed.
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