Thursday, October 30, 2014 4:16:26 PM
Second, you noticed that OTCMarkets still shows a short interest in FSPM. There is no contradiction between this fact and the fact that you can not short grey market stocks. When an SEC suspension occurs, there are many traders who are lucky enough to be holding a short position. When trading resumes, their short position is not closed until they instruct their broker to close the position, or there is a buy-in because the broker no longer has access to shares to borrow. Given that FSPM shares became worthless after the suspension, a trader with a short position may decide to hold their short position into further expected declines. When they decide that the margin tied up with the short position could be more profitably used elsewhere, they will cover.
So it is possible to hold a short position on a grey market stock, but I don't believe it is possible to initiate a new position.
Disclosure- I held short positions on FSPM during a number of downtrends. Why? Because I took the time to read all their financial statements and was able to identify that FSPM was hugely overvalued. The red flags that indicated fraudulent behaviour were icing on the cake.
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