Even if title had passed (this is still disputed) to Opes did it have the contractual capacity to assign the shares without giving notice to the lenders of the shares?
The "Assignment" clause states assignment is not possible without giving notice.
My understanding of this clause was to prevent clients from borrowing stocks and leveraging on it. This is to say:
- You put-up $25 as margin (being 25%) - You borrow stock worth up to $100 - Thereafter, you transfer the $100 worth of stocks to a Bank - Then you leverage against these shares by mortgaging them to the bank. This was, say @ 25% margin, you can borrow up to $400 with the bank. - Effectively, with $25 you could have got leverage up to $400 (i.e. 16 times leverage using a 25% margin)
