Borrowed Shares and Over-Voting. A frequently occurring phenomenon is
where the same share is voted twice. This is commonly the result of the vast
increase in share lending that now permeates the equity markets. Developed in
the context of short sales, the practice of share lending has mushroomed in
recent years and frequently represents a significant source of income for
investors and for brokers and other custodians. By custom and contract, the
shares being lent are accompanied by full voting rights, so that the party
borrowing the stock or its transferee can vote the shares which it holds on a
record date. If, however, as frequently happens the lending party is a
custodian which does not allocate the lent shares to and notify specific
beneficial account holders, it is possible that both the lending beneficial
owner and the borrower will vote the shares and over-voting will occur. Nor
will over-voting be readily noticed if the total number of proxies cast by the
custodian does not exceed its book position at the record date. Historically,
where over-voting has resulted in a custodian voting more proxies than its
record position on the record date, the vote has been “corrected” by the
inspector of elections to reduce the obvious over-vote. More recently, the NYSE
has embarked on a compliance campaign with its member firms to insure more
accurate record keeping of share lending and borrowing, including attribution
to underlying beneficial holders, to eliminate over-voting. Whether the
enforcement campaign will succeed and whether it will affect the practices of
the many custodians that are not NYSE member firms remains to be seen. Even if
over-voting is eliminated, the ability of market participants to “buy” votes by
borrowing shares will not be affected. This, like so many of the problems
surrounding shareholder democracy today, has not been invented by hedge funds.
But it is increasingly being used by hedge funds to further their economic
interests. Record date “capture” of the vote is relatively inexpensive because
stock lending fees are modest and because once the record date has passed the
borrower can return the shares to its lender. As a consequence, this source of “empty
voting,” unless regulated, is likely to grow.
Wenn ich das richtig verstehe, ist das anpassen von Stimmen eine Regulation, die von dem Neu Yorker Stöckchen Markt verlangt wird?!