New investors, the statement "52% of today's volume was short sales" wasn’t in the source file. The most recent short interest is < 1% of the OS and the most recent failure-to-deliver (naked short) # is a measly 338 shares. IMHO interpreting short volume as actual short sales is incorrect. This is what FINRA, the exact same source which you used to post the #, said.
"Thank you for contacting FINRA’s Office of the Ombudsman. Regarding your question, it would be incorrect to assume that short sales comprise 32% of the total volume on that trading day for IPIX. FINRA publishes the daily short sale volume pursuant to an SEC mandate; however, there are various trading anomalies that result in the reported short sale volume often being exaggerated. Thus, the true total short sales volume may be significantly lower than the volume that is reported. Third parties sometimes ignore this and try to claim the ratio is valid to further their own objectives."
MMs mark shares short temporarily to execute trades and they are almost always covered in the same day, therefore the actual short % is much lower than the # suggests. If the short volume indicates actual naked shorting, would the criminals be stupid enough to leave incriminating evidence in the FINRA file?
You can also check out these two posts for some detailed explanations.
“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 two-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due (known as a ”failure to deliver” or “fail”).”
Naked shorting is almost nonexistent (338 failure-to-deliver shares) in IPIX and here’s why.
Reason #1 - SEC Failure-to-deliver Data
“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 two-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due (known as a “failure to deliver” or “fail”).”
"Changing the stock cusip number results in each share with the old cusip number having to be exchanged for a share with the new cusip number, which causes each short position to have to prove the borrow. Naked short positions would be unable to comply and those positions could have to be covered by purchasing shares with the new cusip on the open market."
"Both your transfer agent and IR firm should be able to advise you on the effectiveness of combating naked shorts by changing CUSIP numbers, reverse mergers, and/or reverse splits. Although the long-term effectiveness of these strategies is questionable, it may be useful as part of a larger strategy to deter naked shorting. After changing your company's CUSIP number, for instance, all existing stock certificates must be exchanged for new ones. All issued and outstanding certificates from old shares will no longer represent an interest in the company until exchanged."
Leo decided to change the company name and CUSIP # to expose naked shorting on June 9, 2017. The total volume after the name/CUSIP # change (+3 days) was ~1.625M shares, which indicated the covering was by legal shorts because legal short interest was ~1.2M shares at that time. If naked positions were 10M shares (hypothetical), the total volume would be more than that because naked shorts must cover. For example,
Amarantus - massive covering by naked shorts after name/CUSIP # change.
Leo’s legal advisor includes Michael Sullivan, a former US Attorney for MA with connections to the SEC, so his method to expose naked shorting must have some merits.
Reason #3 - No Actual Evidence
By actual evidence I mean official SEC data or something that can be used in court. Proponents will claim IPIX is under attack by sharing naked shorting articles, videos and court cases. Here’s an analogy - just because there’re thieves (naked shorts) in my neighborhood (other companies) doesn’t mean there’re thieves in my house (IPIX). If Leo is suing naked shorts, he’s going to need actual evidences. He can’t just say his company is under attack because other companies are under attack or naked shorting exists in general in court. Investors should know where the constant selling pressure is coming from.
11. I read on an internet chat room or website that a specific security has a large number of fails; are these sources reliable?
"Investors can and should verify the number of failures to deliver in a specific security by checking publicly available data on failures to deliver. The Commission publishes on its website failures to deliver data for all equity securities, regardless of the fails level, twice per month. For current failures to deliver information, see http://www.sec.gov/foia/docs/failsdata.htm.
Investors should always be cautious that issuers, promoters, or shareholders may be seeking to stimulate buying interest by making false, misleading or unfounded statements in internet chat rooms or other such forums about alleged large “naked” short positions in some smaller issuers. Some individuals may encourage other investors to buy these issuers’ securities by claiming that there will be an imminent short squeeze, in which the alleged “naked” short sellers will be forced to cover open short positions at increasing prices. These claims in fact may be false.
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