Legal title to the stock passes to the borrower, which is why they can sell it. The borrower has an obligation to return stock on demand and can return stock whenever they like. The borrower is obliged to lodge collateral with the lender, which legal title also passes to the lender. That is, if they lodge cash, the lender can go invest it and keep the interest, or go spend it on something else. If/when the stock is returned, the lender is obliged to return the collateral to the borrower. It's not very complicated. Shorting stock does come with some risks, as those short over the past two days have found out, noting that the required collateral moves up and down with the share price, so the upwards move increases demand for liquidity from the borrowers as well... not a nice place to be for them, but that's markets for you.
PLS Price at posting:
$2.87 Sentiment: None Disclosure: Not Held
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