"Where is it written that they have the right to "borrow" shares to short in the first GD place?
That's the ultimate irony. The bastards use MY stocks, to enrich THEIR pockets, and by so doing, destroy MY investment."
The cork,
I posted this earlier on another board, but thought it might pertain to your quote above.
"your mention of this ongoing debate on Ihub prompted me to call my broker and get the skinny from their perspective.
Fidelity will only "tag" my shares in my margin account if I have a margin debt balance. In other words, if I'm borrowing funds from my broker (and paying interest) will they make all shares in my account (not just the stock that put me into margin) available to be shorted. Since I'm borrowing these stocks from my broker, they believe that they have the right to make a buck on them by lending them out.
He was almost 100% certain that this is an industry wide standard. So, there is nothing I need to do except avoid using margin which is something I only do very very rarely any way.
Another part of the debate: can pennies get shorted? Answer: Absolutely, it's harder to do but happens all the time.
His take on the NSS crisis put the blame squarely on the hedge fund traders, not small time retailers who don't have enough capital to make it worthwhile.
Hope that helps."
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