Uh oh, JB a bashin .............
And he's Canadian, lol.
BTW, in response to an earlier post of yours .......
If you have borrowed shares to short a stock that pays a cash div, the amount of the div will be deducted from your account and paid to the individual from whom you borrowed those shares to short. The dividend from the company will paid to the individual who bought the shares from you when you shorted them. The amount of the dividend deducted from your account is applied to your cost basis for the original transaction, thus a deduction.
If you have borrowed shares to short a stock that pays a stock dividend, you are responsible to deliver to the individual the shares = to the dividend amount in said stock, whether a spin off or that stock directly. However, if split, your short amount doubles on the day of the split. Again, the cost basis of those shares is a decuction to you from your cost basis on the stock if a true stock div.
The SEC has not stated specific guidelines for dividend payment via "naked" shorts since they are not recognized as a legitimate overnight trade, only a daytrading vehicle. However, it would make sense that if there were more long shares held than the OS of the co, and not enough div to go around, the stock would be halted and a many month investigation would occur.
In the case of a non reporting company, one which the company refuses to publicly state the OS, I think it is ludicrous to assume a "naked short". I know several market makers, my father is best friends with the CEO of a market making firm with whom I have dined many times, and I can tell you that from what I've been told, naked shorting is only an intraday vehicle to help make a market, is always covered by the close, and NO MARKET MAKER would ever hold a LONG OR SHORT position in a pink sheet stock, unless it was a former big board issue delisted, in which case brokers immediately reccomend covering for fear of future lack of liquidity.
Hope the fish are biting!
Buzz
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