FINRA is displaying data from mandatory reporting brokerages that directly contradicts you. What's your explanation for that? Mine relies on Occam's Razor: You are mistaken.
I will admit that I used to think the same thing as you until I wisened up.
Here is how and why so many people think that penny stocks are being shorted, and its completely understandable. Back in the 1990's internet brokers began to pop up and by 2000 they were going full bore and the age of the internet broker began. Trades were made at a pace that had never happened before and the stock market failed to keep up or for that matter adjust the way trades are reported.... they still do not to this day.
Short data comes from trades that are reported and then executed thru the exchange they are made on, (yes I know the OTC is not an exchange) And those trades are enter as sold but not delievered for 2 day from the time of the trade. FINRA handles it in this manner.
I own SHMP in my Etrade account and I sell all 10,000 shares to Robert who entered the buy thru his Schwab account.... Etrade takes the shares from me at the time of the trade and will then electronically send them to Schwab... Schwab will then credit Roberts account as having those shares.... FINRA or the OTC will enter them as short shares... because they have not actually been delivered, according to the language in for the definition of Short Shares, any shares not delived at the time of a sale are logged as Short Sales Data...this is not the same as Short Interest Date. People can read the full context of how shorting is calculated on the FINRA link below. Here is an excerpt from that page that explains Short Sales and Short Data
Some market participants mistakenly conclude that the bimonthly short interest data is understated because the Short Sale Volume Daily File reflects volume that is much larger than the positions reported as short interest. However, short interest position data does not—and is not intended to—equate to the daily short sale volume data posted on FINRA’s website.
This all happens because 90+% of all OTC trades are done via Internet Brokers and stock certificates are not passed from one investor to the other. For people out there now, when their parents or grand parents traded stocks they did it with certificates... we in todays day and age do not, we never see a certificate
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