"1. You can short a penny stock, there are offshore brokers that actually make it very economically feasible."
This is a very common, but incorrect, assertion in the OTC. It had its genesis when many years ago some OTC stocks would get dual listed on a shady foreign exchange (the Berlin Boerse was one) and then the stock would be shorted on that exchange that had very different rules. That has all but stopped.
That got morphed into the idea that some offshore broker could short on a US exchange or the OTC and not have to abide by US regs and rules.
That simply is not true.
ANY offshore broker will either have to be registered in the US to affect trades on US markets OR work through a US registered broker.
EITHER WAY, they are subject to the US Federal Reserve Regulation T Margin requirements which is $2.50 PER SHARE margin required in order to short ANY stock on a US market who's share price is less than $5.00.
There is no way around that...but as with so much in the OTC these myths of "offshore brokers" being able to "short" an issue in the US market persist.
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