Livewire Ergogenics Inc (LVVV)

[mvp_money]

#11 Large short positions in penny stocks don't occur because it is almost impossible for anybody outside of a market maker to take a significant short position in a penny stock.

Aside from the fact your rule #11 says first, "Large positions" don't occur, making no mention of small or medium size short positions (and how do they distinguish what size is what?) It also clearly says market makers can short however much they want, small medium or large.

Whenever a market marker can locate paper he will short the stock. Every time. When LVVV initially started to trade there was definitely MM shorting and covering.

During the initial offering there were large short positions and the market markers doing it were forced to cover and then never came back on the box.

Even today FTD's still exist and need to be accounted for:

http://failstodeliver.com/default2.aspx type in LVVV and search if it doesn't already have it up

I admit the FTD's aren't that bad but there is shorting if there is FTD's

http://www.investopedia.com/terms/f/failuretodeliver.asp

Failure to deliver is also important when discussing naked short selling. When naked short selling occurs an individual agrees to sell a stock that they neither own nor have borrowed. Subsequently, the failure to deliver creates what are called "phantom shares" in the market which may dilute the price of the underlying stock.