First, naked shorting is not legal. Therefore, reporting it to FINRA would result in either a huge fine, or substantial legal trouble for the MM who reports naked shorting.
Naked Shorting by definition is...
The bi-weekly report is a report of the legitimately shorted "interest", not the illegal shorted stock.
On the OTC, MMs are not required to cover in 3 days.
Mainly because naked shorting does exist on the OTC and MMs would never report their interest to FINRA, however, it's in their best interest to cover any "short" positions before the bi-weekly report so they aren't in FTD.