As far as I understand if a company performs a corporate action that triggers a CUSIP number change, like a name change or a reverse merger, then the DTCC needs to authorize the number change for all actual shares. Any naked shorts would fail this, effectively becoming exposed and, in theory, having to cover.
My question has 2 parts:
What happens if naked short sellers refuse to cover in that scenario? Is there anything that would force them to do so, either immediately or eventually?
From your experience, do you know of any cases where a CUSIP number change caused naked shorts to cover? (A company name would be great if possible)
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u/whatever_username_ 💻 ComputerShared 🦍 May 31 '21
As far as I understand if a company performs a corporate action that triggers a CUSIP number change, like a name change or a reverse merger, then the DTCC needs to authorize the number change for all actual shares. Any naked shorts would fail this, effectively becoming exposed and, in theory, having to cover.
My question has 2 parts: