If you read the Regulatory Notice 12-38 regarding FINRA's Short-Interest Reporting Rule, you'll come across this particularly relevant question in the FAQs. Q7. How should a firm reflect fractional shares in its short-interest reports? A7. If a firm has a fractional short-interest position (e.g., 125.6 shares), it should truncate the position to reflect a whole number when reporting such positions to FINRA pursuant to FINRA Rule 4560, instead of rounding the position up or down. For example, firms should report short-interest of 125.6 shares in XYZ as 125 shares. This is manipulatable and is potentially being used to minimize reported short interest by Robinhood, Market Makers, Short Hedge Funds and other complicit funds/firms by breaking one transaction into numerous fractional transactions, allowing reported short interest to be much closer to 0% then the actual percentage should be. Examples of Robinhood cost basis manipulation with $GME stock shares. 1. https://www.reddit.com/r/Superstonk/comments/ngs81d/just_got_my_cost_basis_information_from_robinhood/ 2. https://www.reddit.com/r/Superstonk/comments/ngkrg3/proof_that_rh_had_to_scramble_to_find_shares_when/ 3. https://old.reddit.com/r/Superstonk/comments/ncezct/so_robinhood_finally_sent_over_my_cost_basis_from/ 4. Normally this wouldn't matter, because it would be less than 1 share * number of orders affected. For example, 126.99 gets truncated to 126 shares. If that 126.99 share transaction is broken into 100 transactions all involving fractional shares the truncated report would show the transaction only involved to be 26 shares. This could be manipulated more and I believe currently is. I believe all transactions should be reported in entirety whether whole or fractional shares are involved and complete reporting of all outstanding loan obligations. I also advocate that failure to follow this rule should results in fines; not less then (Share Price at time of Violation) * (Total Untruncated Shares - Reported Truncated Shares) This would act as an effective deterrent and make the practice unprofitable. Revocation of applicable licenses for repeat offenders would also be terrific for Market Integrity.
Anonymous-GS Comment On Regulatory Notice 21-19
If you read the Regulatory Notice 12-38 regarding FINRA's Short-Interest Reporting Rule, you'll come across this particularly relevant question in the FAQs. Q7. How should a firm reflect fractional shares in its short-interest reports? A7. If a firm has a fractional short-interest position (e.g., 125.6 shares), it should truncate the position to reflect a whole number when reporting such positions to FINRA pursuant to FINRA Rule 4560, instead of rounding the position up or down. For example, firms should report short-interest of 125.6 shares in XYZ as 125 shares. This is manipulatable and is potentially being used to minimize reported short interest by Robinhood, Market Makers, Short Hedge Funds and other complicit funds/firms by breaking one transaction into numerous fractional transactions, allowing reported short interest to be much closer to 0% then the actual percentage should be. Examples of Robinhood cost basis manipulation with $GME stock shares. 1. https://www.reddit.com/r/Superstonk/comments/ngs81d/just_got_my_cost_basis_information_from_robinhood/ 2. https://www.reddit.com/r/Superstonk/comments/ngkrg3/proof_that_rh_had_to_scramble_to_find_shares_when/ 3. https://old.reddit.com/r/Superstonk/comments/ncezct/so_robinhood_finally_sent_over_my_cost_basis_from/ 4. Normally this wouldn't matter, because it would be less than 1 share * number of orders affected. For example, 126.99 gets truncated to 126 shares. If that 126.99 share transaction is broken into 100 transactions all involving fractional shares the truncated report would show the transaction only involved to be 26 shares. This could be manipulated more and I believe currently is. I believe all transactions should be reported in entirety whether whole or fractional shares are involved and complete reporting of all outstanding loan obligations. I also advocate that failure to follow this rule should results in fines; not less then (Share Price at time of Violation) * (Total Untruncated Shares - Reported Truncated Shares) This would act as an effective deterrent and make the practice unprofitable. Revocation of applicable licenses for repeat offenders would also be terrific for Market Integrity.