Legality of shorting penny stocks

Discussion in 'Trading' started by swordking, Jan 24, 2006.

  1. swordking


    Is it legal for a US resident to short penny stocks via an offshore brokerage? Is there any way for a US resident to legally short penny stocks?

    Or would I have to move somewhere miserable like the Cayman Islands to do something like that?
  2. Shorting penny stocks isn't illegal. It's up to the broker to decide if they will extend you margin on a penny stock, since a short sale requires margin.