Ann: Becoming a substantial holder, page-30

Just to try to clarify how stock lending works and the position of CS. Here is my understanding of CS's ( and other prime brokers) involvement.

As a custodian, you can provide stock lending to clients who sell short. The custodian borrows the stock from the market; where long term holders ( e.g. pension funds) look to boost their returns by entering into a stock lending arrangement with the custodian. The transaction is actually initiated by a short seller, who sells the stock in the market and borrows it from the custodian, at current interest rates to deliver to the buyer on settlement day
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the custodian who has borrowed becomes the beneficial holder on the register and when he has a large volume of borrowed book he has to return a substantial holder form, which CS has done here. This is a quirk of stock lending, as he is not actually the beneficial holder in the normal course of events.

In terms of taking a proprietary short position of its own, that would be quite risky for CS and utilise a large amount of capital, so I would be surprised if that were the case, but of course it is possible, although I would expect they are only acting as custodian.

Hope that helps to clarify and good luck with MSB.

Wazz