Why shorting a penny stock is difficult at best..h

Why shorting a penny stock is difficult at best..however some are turning to offshore accounts where it can much easier..

1. Extremely high margin requirements in relationship to the value of the shares sold short..a major broker that I use (Etrade) and I am sure the others are close if not the same..require you to have $2.50 worth of margin on deposit in order to sell each share short..keep in mind that these funds or marginable securities may not be withdrawn or used for other uses until the short is covered..so to tie up $2.50 to sell a .05 stock short seems somewhat short sighted..

2. The difficulty of finding a broker that is willing to accomdate a investor that wants to do these type of trades..guess for a larger client they may try harder..there are some Interactive Brokers is one ..

3. Borrowing the shares to short can be hard for several reasons..many times pennies are kept in a cash account and the shares have to be in a margin account to be lent out by the broker...many brokers will not even check for availability..also there are offshore accounts where large amounts of pennies are kept..in addition these accounts allow much more leverage and escape regulation