was looking into lending my TSLA shares in TD Ameritrade account in their (Fully Paid Lending Income Program) ... trying to understand the risks ... in particular the red text below
sounds like there is a > 0% chance I could lose my TSLA shares ... any help understanding risk here is appreciated .. in my mind the possibility of losing accumulated shares is not worth the income
Important considerations
It’s important to note that there are risks of Fully Paid Lending Income
- Typical Investment Risk: All inherent investment risks apply and share performance is subject to market fluctuation.
- SIPC: The SIPC doesn’t cover shares on loans, which are secured by 102% collateral provided by TD Ameritrade and held at a third party bank. You can withdraw on this collateral in the unlikely event of a default in which TD Ameritrade does not return borrowed securities.
- Tax Implications: After you lend out a dividend-paying security, you’ll receive cash-in-lieu of your regular dividend payment. It’s important to remember that dividend income is taxed at a different rate.
- Waived Voting Rights: Your shares will be lent out and you will temporarily forfeit your voting rights to the borrower. However, if you’d like to reclaim them before the record date, it’s easy to regain your voting privileges.
- Market Dictates Demand: Whether or not your securities are borrowed depends on their volume and lending market demand. Interest rates and demand will vary by security over time