My Account Was Debited for a Dividend Payment (Payment in Lieu) for a Short Stock Position Which I Don’t Recognize. How Did This Occur?

Overview:

A short stock position may originate from an option position which you held in your account. For example, if you hold a long put position in your account, that position may be subject to automatic exercise by the clearinghouse if it is in-the-money by a defined threshold at expiration. This put exercise will generate a short stock position in your account (assuming you do not have an offsetting long position), and you are obligated to pay any dividends should you maintain a short stock position on the ex-dividend date.

Similarly, a short call position in your account is subject to assignment should a call purchaser elect to exercise their right to purchase the stock and your account be allocated through the random clearinghouse and broker assignment process. This call assignment will generate a short stock position in your account (assuming you do not have an offsetting long position), and you are obligated to pay any dividends should you maintain a short stock position on the ex-dividend date.

These payments will be reflected on your Activity Statement as a 'Payment In Lieu Of Dividend'.