But how would that money get to my account? The company picked a sort of random date August 30, as the record date of which shareholders would be eligible to receive all future liquidation distributions. So there is no payment to X, and the short seller could claim that there should also be no payment to me. Did you lend out any shares? I own shares. This piece of paperwork proved a bit tricky to complete. As a result the stock became basically worthless after that date, but since the stock continued to be traded for some time it offered shareholders a nice way to profit twice. BIND Therapeutics filed for chapter 11 bankruptcy protection in early There are no issues for me. Luckily for me Interactive Brokers proved to be quite capable in handeling this weird situation.
What about short sellers Directly distribution money to shareholders while bypassing the depository raises an interesting question: It managed to sell its assets to Pfizer for enough money to pay back all creditors with some money left over for equity holders. This piece of paperwork proved a bit tricky to complete. The short seller is supposed to pay me whatever I would have gotten on the shares if I would not have lend them out. Equity distribution form While this is already weird, it got even weirder this year. Did you get paid on these shares? Luckily for me Interactive Brokers proved to be quite capable in handeling this weird situation. So how to deal with this situation? You needed to provide the signed tax form to your broker, and your broker needed to sign-off on the number of shares you owned on the record date. Based on some unhappy shareholder letters in the docket not all brokers were willing to do this. So there is no payment to X, and the short seller could claim that there should also be no payment to me. But lets say that I owned another shares that I did successfully fill out the paperwork on. So far all pretty straightforward, but the liquidation plan came with an interesting twist. Is his broker then on the hook for it? A process like this has a lot of points where things can go wrong. Did you lend out any shares? Lending out shares to short sellers is supposed to be sort of risk-less. As a result the second liquidation payment contains a nice windfall profit for those who did manage to do all the paperwork. And even if they would know, can they fix it on an account by account basis? If I would claim ownership of shares, and person X would claim ownership of shares the liquidation trust is going to pay money to the same shares twice. I own shares. Part of the reason that the stock continued trading at an elevated level was probably the involvement of a fund that apparently bought approximately one million shares after the record date. There are no issues for me. Someone who has been short this stock on the record date? The company picked a sort of random date August 30, as the record date of which shareholders would be eligible to receive all future liquidation distributions. But imagine how messy it would be there would be a lot of people short.
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