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The money goes to whoever holds the real share. A loans a share to B. Now A owns an iou, which doesn't have any voting rights. B agrees to pay A an amount of
by auntienomen 6y ago
The money goes to whoever holds the real share.
A loans a share to B. Now A owns an iou, which doesn't have any voting rights. B agrees to pay A an amount of money equal to a dividend payment if a dividend is paid by the company.
B goes short by selling the share to C.
C owns a share of stock.
When the company pays dividends, C is paid and B pays A.
- thatguy0900 6y agoAlright, thank you. That makes sense. How do the voting rights work for share A? I was under the impression that brokerages loaned the shares out without the explicit knowledge of the original owners that it was happening. Is it just that people with margin accounts functionally don't get a vote?
- Anon1096 6y agoYou lose the voting rights as well. Users on brokerages typically agree to this when signing up. Some have opt outs but you may lose features being subsidized by the brokerage having the ability to lend shares.
- thatguy0900 6y agoCool, thanks for explaining it to me.