If investment fund managers lend shares for the purposes of shorting and the fund retains other shares in the target company e.g. RFG is there a conflict of interest by the fund manager in that they are knowingly aiding the SP fall while at the same time remaining long on the same shares in other portfolios. If a unitholder in the other portfolio wanted to redeem their units backed by shorted shares e.g. RFG then the redeeming unit holder is penalised because the shorted company SP has been engineered to be lower.
Is that a conflict of interest?
How would trustees feel about a class action from redeeming unit holders when the redemption funds were engineered to be lower through shorting with shares lent out that were in the care and custody of the trustee?
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