The $2.50 rule is something we cannot get around, but brokers can make an exception for certain private clients. Especially those who can show that they will have the free trading shares within a given time frame. Some convertible contracts actually state that if they short in advance, it isn't really shorting because they will own the shares eventually. I am not sure if that does anything short of cover their butt if sued for bad faith or something similar.
Further, they are not going to short 62 mil shares in one day when the average trading day does 30 mil shares. If they shorted say, 5-10 mil shares at a time while buying back at lower prices they can cause a dip and buy back instantly. Wash, rinse, repeat. This wouldn't show up on the short report because the position is closed by eod and it will do as I said - lower the price and allow them to trade the spread.
I hate arguing about shorting because there is so much bs floating around concerning it. The first $mill I made on a single stock was on IBCL (formerly BSTI) - and lost when the stock was halted by the SEC for a bogus PR. A group when through the Caymans to short toxic debt. It was brutal. Never showed on any short report, but the shorting was confirmed to me directly by the SEC. The company knew it was happening so they tried to change the name, cussip, give shareholders shares of a different company... everything. The CEO finally tried to screw them over by putting out a PR saying that the US gov was interested in their product and the FBI had to do a background check to make sure they were legitimate. The stock went from .03 to .35 before the SEC halted them. Never use the FBI as a reference when they aren't. As a major shareholder (day trader) I was asked to testify against the CEO. He went to jail and I got a $130 check years later as some sort of compensation for losing $1.2 mil. I know it can be done and is done.
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