As per the info you are presenting, I generally agree with your friends, but there is way more to it than that. I don,t know how much they filled you in on the subject, that you may have forgotten, but there is a couple important things left out of the explanation. I will not get into them heavy because I am sick of throwing these things out there by now. But I will focus on the the last part of your post about only 2000 shares showing as being shorted.

We get the short list every two weeks, certain brokers can access the shorts daily on any stock. With SLI it mostly gets shorted inbetween the 2 weeks that we as retail cannot see, then it is covered before the next report comes out, usually. There is also the other trick of the cross trading that can settle up a short position in one account by merely transferring shares to another account, and continue the leg down after the 2 week period we see. So, a shorter can build a huge position short, with none of it showing up on the registered shorts we see. And, they can do it within a 3 day settlement and have it not show up because it is covered within the 3 days, but these same shares had 3 days to push a stock down to make a profit and don,t get recorded because the trade was a wash.

As far as naked shorting goes, there have been stories years back where some companies had 1000% naked shorts out on them. It is 13 days to cover a FTD now I believe, so that time period fits well within the 15 days of a report if it does partially show up in certain places. The MM,s are allowed to legally naked short a stock in some countries to get it to move down if it is desired, they know the rules and must keep controls on their mechanisms of trading.

Conclusion; there are many ways to hide a short position, if all the internet info is true that has been filed away over the years.

IMO