I agree that probably everyday LHPT is shorted, and many more pinks and otcbb ones as well. What matters is ARE THEY listed on threshold list for failure to deliver. LHPT does not have any failures to deliver flagged on their symbol. So playing OTC plays, you will always get shorts, and yes it most likely does at times effect the price of the PPS. AND ALTHOUGH I AGREE IT SHOULD NOT BE LEGAL, in most cases it NOT. So this is just part of trading, certainly on OTC non reporting play, if people have issues with shorting, they may want to consider not trading, as it always is going to happen, and has and will continue to happen on LHPT. It stinks, but that is not the main reason LHPT has tanked to .0001. And nothing is going to change with shorting of LHPT. Its legal, especially at no bid .0001, as they are certainly by shorting not minipulating a share price up or down, as if they did that, then it would be illegal. So LHPT and almost every other pink out there gets shorted and unless they come up on the threshold list, which LHPT is not, its part of trading everyone should consider playing at these levels.
Here is part of official rules.
Are short sales legal?
Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited.
II. "Naked" Short Sales
In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. 3 As a result, the seller fails to deliver securities to the buyer when delivery is due (known as a "failure to deliver" or "fail").
Failures to deliver may result from either a short or a long sale. There may be legitimate reasons for a failure to deliver. For example, human or mechanical errors or processing delays can result from transferring securities in physical certificate rather than book-entry form, thus causing a failure to deliver on a long sale within the normal three-day settlement period. A fail may also result from naked short selling. For example, market makers who sell short thinly traded, illiquid stock in response to customer demand may encounter difficulty in obtaining securities when the time for delivery arrives.
Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security4 generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board,5 as there may be few shares available to purchase or borrow at a given time.
So IMO there is not reason to make shorting LHPT a big deal, it stinks but it is what it is thanks to bad rules set forth by Finra and SEC.
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