Can someone explain the mechanism in short selling.
I hold shares in KCN and [shortselling] lists say approx 10% of shares have been borrowed [ and therefore sold ] by Bank America and Macquarie Bank
Aggressive shortselling of shares drives the price down which are later bought back for a lower price and returned to the entity borrowed from.
But what happens to the responsibilities that the shortseller assumes ? Does the shortseller have to reverse the shares short sold before the record date to avoid having to make available shares @ $1.00 each to the entity the shares were borrowed from ?
Or does Bank of America simply get themselves appointed the underwriter and take up all the shortfall in the capital raising [ thereby exiting the trade ]
