Sorry, amigo, but you’re the one that’s full of you know what. In honor of St. Paddy's day, I'll be generous and just say that you're full of Blarney. You are assuming what you want to believe.
I’ve had no trouble shorting TVIX below7, below 6, below 5, and yesterday (a bit too soon) at $3.94.
Yes, the security is considered “hard to borrow” and I must pay a vig of ~2.2% to my bookie.
You are partially correct. Many firms DO not allow shorting of securities trading below a fin. But that is a house decision, not an SEC rule. And usually shares trading below $5 require 100% collateral.
A full explanation is available at Investopedia. I tried posting this message initially with the appropriate link, but the Y! censoring software banished the post into the ether.
So go to Investopedia and paste “Can you short sell stocks that are trading below $5? My broker says that I can't.” into its search box.
Good luck to you and please do your homework first before you flame.