Since you know how NSS works then perhaps you can explain this part to me: at what point, exactly, do the evil NSS'ers actually collect their millions upon millions of dollars? Where does that money come from? Why haven't we ever heard of brokerages going bankrupt from paying these guys? After all, they've destroyed so many wonderful penny stocks and certainly must have reaped billions in the process.
Also, why should said mystery party actually pay the NSS'er in the first place? If they are able to evade RegSHO and keep any/all record of their actions secret, what obligation does their broker have to pay them and not just keep the money for themselves? It's not like the evil NSS'er have any recourse to collect their illegal profits.
For NSS to be possible, one must believe that some entity is able to create shares out of thin air in order to short them without ever covering.
If they have the ability to create fake stock then wouldn't it be infinitely easier for them to go long on those air shares and ride the momentum of the wonderful penny stock company's success instead of all the illegality involved with trying to destroy it? After all, the potential profit from a short position is finite whereas the potential return from a long position is unlimited.