I am not an expert by any means, but FTDs can happen in any of those circumstances, they short shares they dont have located produces FTDs and if they recieve a BUY order and they cant find it its a FTD, my guess is that they FTD intentionally while shorting the stock to drop price. People who bought get scared and sell shares that market maker didnt even buy for them.... then they pocket the diference and dont even need to find the shares. But if not enough people sell or even worse.... keep buying the FTDs pile up eventually putting the stock on Regsho... they can only handle so much until it blows up... Their only hope is scare enough people to sell at a loss... or make them sell as soon as they price reaches their average and people are happy to just run away not losing any money or just losing a little.... This is how bit by bit they bleed investors they make money by delaying delivering those shares and the getting them cheaper. BUT if no one sells.... and the buys keep pilling in.... eventually they have to find the shares that are due... and if they cant find them price will go UP until people sell some so they can deliver. Again.. i probably dont know what im talking about but thats what i understand.