Why Can't You Sell Your Shareholder Votes/Rights?

I'm a sophomore finance major, so no expert in this kind of stuff by any means. But this kind of thing is not illegal. Large pension funds often sell their voting rights to activist investors. They both benefit for obvious reasons, the pension fund doesn't need these voting rights, while the hedge funds don't want to risk that amount of economic exposure.

I'm pretty sure another technique for this kind of stuff involves some financial engineering. This is getting a little farther from your question, but I believe another technique is that these investors will take up large long stock positions, with voting rights, while simultaneously going long puts, mitigating the risk that comes with these long stock positions, to gain an overall position that has a huge amount of voting rights, while keeping the economic exposure to the stock manageable.

Themelis is correct - it is indeed possible to separate the voting rights portion and investment portion of stock ownership. The simplest way is through proxy voting, a method by which I can transfer my citing rights to a third party. Now I'm not sure whether these rights being sold is common, but as far as I understand it would be legal. It's more common for mutual fund managers to be granted proxy votes by the fund's investors, or for activist hedge funds to solicit proxies in what is known as a "proxy battle" so that they can exercise more influence.

For an overview on more complex methods, check out this paper by Latham & Watkins: http://lw.com/upload/pubContent/_pdf/pub1878_1.Commentary.Empty.Voting…

same reason you can't sell your political voting rights