Shorting penny stocks is not the smartest thing to do. but most experienced people in the market know this.
Most firms do not permit their customers from shorting penny stock since they can not borrow them in order to make delivery - margin account has nothing to do with this. Penny stocks ae not used for margin, therefore they have no loan value and as such must be segregated by the brokerage firm and can not be lent to another firm or another customer
I agree with "the Old Guy". penny stocks are not available for loan (especially those owned by customers) since they are fully paid for and as such in order to be in compliance with "the customer protection rule" (15c3-3) which states that such securities must be totally segregated and must be in the possession and control of the firm at all times - this means they can not be on loan.
However, if the firm owns the stocks they can be used for loan HOWEVER, not too many firms hold penny stock in their inventory.
(the retired portfolio manager with $millions of experience shorting professionall should know this
My 2 cents on shorting penny stocks - not illegal, but practically impossible because shares are never available to borrow. The lack of availability is directly related to margin accounts and $5 cutoff.
Yahoo does not actively monitor message boards. It is highly unlikely that yahoo is removing your posts, but rather some person or group is reporting you.
If you post a ticker or two, I'd like to have a look.
If reported on Answers, you get an email and an opportunity to appeal. Not sure how it works on Finance as I've never had anything reported there.
A stock is bid / ask 36c / 37.5c. Some smart aleck keeps suggesting I short. There is no such thing as legally shorting stocks in USA. Shorting requires a margin account. Under Fed Res rules, a stock has to be ABOVE $5 to be able to be margined, hence my broker won't let me put any long position on shares below $5 into my margin account, NOR will they let me borrow any under $5 stocks to short.
I keep responding to these challenges to short penny stocks and Yahoo keeps yanking my polite, factual, short version replies. HOW COME?
