The registered owner of shares of stock, known as the holder of record, is the investor who possesses the votinꦓg rights associated with those shares. This sharehoౠlder is entitled to vote on any corporate action that is decided upon by shareholders.

Short sellers of stock never own🅠 the shares that they sel꧒l and therefore never possess the voting rights associated with them.

What Is a Short Sale?

When an investor or trader believes that a stock will decrease in value, they may seek to profit from this potential decline by shorting,🧜 or selling, a stock.🐟 This is the opposite of buying a stock with the expectation that it will increase in value.

Many investors have 澳洲幸运5官方开奖结果体彩网:margin accounts at brokerages. When opening margin accounts, investors enter into an agreement with their brokerage firm that their shares can be loaned out to those shorting them. The shares are returned when the short posꦫition is closed out.

Th♔e person shorting the shares does not own the stock.

To make the short sale, investors place their order and their broker lends them the shares from another customer's inventory (or their own). The broker then sells them on the market for short seller.

Eventually, the short seller closes out their position by buying back the shares with the goal of making a profit. The shares are then returned to the account of the invest♕or who lent th❀em.

The short seller's profit is the difference between the higher price when the shares are sold and the lower price when they're bought back.

Throughout the entire transaction, the short seller never owned the stock. The stock shorted was borrowed and the stock bought back was returned to the lender. Therefo🌄re, the short seller is never the holder of record.

Voting Rights in Short Sales

To determine the holder of record, and thus who retains the voting rights, f💧ollow the shares. Initially, the s🙈hares are held by the either the brokerage firm, a customer at the brokerage firm, or another brokerage firm. They are the holder of record.

But whoever lends the shares for the short sale loses their voting rights for those shares when the shares are sold. The investor who purchases these shares becomes the holder of record and ther⛄efore controls the voting rights.

The short seller does not get voting rights. When they close out their short position, the shares are returned to the lender (the initial owner), and they once a♋gain have the voting rights.

To be clear, whoever owns the shares on the 澳洲幸运5官方开奖结果体彩网:record date is entitled to the voting rights. So, for example, if the loaned-out shares are not returned to the original owner by the record date, they won't possess t💧he voting rights. The investor who bought them꧟ will.

Example of a Short Sale

Say that ABC stock is selling for $200 per share but you believe thaꦕt it will drop because of some recent negative news. You dไecide to short sell the stock based on this analysis.

To short sell the stock, you will borrow 100 shares from your broker and then sell those shares at the current market price. In this case, that's $200 per share.

Once those shares are sold, your broker will deposit $20,000 into your account ($20🌌0 x 100 shares). You have the obligatio൲n to return 100 shares of that stock at a later date.

Assume the market price of that stock falls from $200 to $15🐠0. You determine this is as low as the stock will go and close out your short position. You purchase 100 shares of the stock at $150 for $15,00🐷0.

You then return those 100 shares to your broཧker and book a profit of $5,000 ($20,000 - $15,000) on t⛎his short sale transaction.

The Bottom Line

An investor who𒊎 shorts stock because they believe that the price of a security will decrease never owns the shares. They borrow them from their broker. Therefore, they have no voting rights associated with those particul๊ar shares.

Voting righ🐭ts belong only to an owner of shares of stock as of🐼 the record date on file with the company.