ERHC Energy Inc (ERHE)

[Krombacher]

what was "discounted" many months ago was the notion that the FINRA reported numbers depicted shorting in ERHE...those numbers are mostly market maker shorts and there's no shorting in the bimonthly Finra reports...that is because retail investors are not permitted to short OTC BB stocks in the U.S. at most brokerage houses...hence mostly market makers.

But at Interactive Brokers, it's an internal ecosystem. In other words, only investors at Interactive Brokers can loan their shares only to shorters at Interactive Brokers for shorters to sell.

None of that is reported to Finra because it's all internal...from the outside it just looks like someone at Interactive Brokers bought and then sold the shares shortly thereafter...you see only the net effect. But internally, someone bought loaned to someone else internally and that someone else sold.

Since it's the only way that I know of for shorting to take place in the US in OTC stocks, I believe that there's a strong incentive for shorters to migrate to this system to short an OTC stock if they happen to believe that the stock is headed south.

Also, if you are a holder of ERHC and are long at Interactive Brokers, there's also a strong incentive to loan your shares to the short investor at Interactive because you get paid some interest for that loan.

Krombacher