Who votes the shorts? Who votes the naked shorts?
Consider Jim, Rob and Jerry. Jim bought some shares ages ago and holds them in his trading account. Rob deals with the same broker and short sells Jim's shares. Jim of course does not know this. Jerry bought Jim's shares and thinks they are his and they are listed in Jerry's trading account. So we have the same shares now listed in both Jim's and Jerry's trading accounts. Rob of course owes the shares and will need to cover some day.. if that day ever comes.
A proxy fight develops and a vote must be made. Who votes? One would think both Jim and Jerry have a right to vote. Their votes might cancel each other or they might re-enforce each other. Neither situation is valid.
The broker has no right to just "create" the additional votes out of thin air and our friend Rob has no right to create votes either. Furthermore Rob is not in a position to purchase the right to vote.
So what happens?
I have just checked my proxy forms. I cannot find any document which shows the number of shares I hold. Furthermore I cannot find any way to check that the number of shares listed under my control number is correct.
In the Jim and Jerry example... if the broker decides to split Jim's and Jerry's shares between two (2) control numbers then who would know? How could either Jim or Jerry find out? The issues is that the broker advises how many control numbers they need and of course it is known how many shares the broker holds... but how these are allocated? Seems only the broker knows.
With my pure mathematical background I do not see any solution to this dilemma, yet it is clear to me that the problem exists.
So I ask again... What happens? How do they extradite themselves from the ka ka.
