Everything is not cleared through the DTCC. If you have a dishonest broker and he is banking on the stock going down he sells IOU's direct to others not through the DTCC.
Nothing illegal about it except for the fact that he does not cover the FTD's.
So in essence they are trying to keep some one from guessing float numbers and selling IOU's or NS as most people know it causing more supply than demand.
What is the advantage to this? He buys the legit shares at a lower price and never borrowed anything.
Not everything has a visible paper trail to outsiders, cause everything does not clear through the DTCC. Happens all the time, in fact the reality is that a lot of FTD's that even clear through the DTCC stay outstanding for 50 plus days. They do not advertise this.
http://www.businessjive.com/ Link to help explain it, sorry it is long and you still will probably not believe but I tried to inform you.
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