What naked shorts?
Do you have any evidence for these claims?
Do you have any evidence for these claims?
This is a list of stocks that have been sold, but the seller failed to deliver those shares. AKA naked shorting.
GME has been on this list for a month now.
SEC call this "Reg SHO". https://www.sec.gov/investor/pubs/regsho.htm
Of course, this list isn't indicative of the amount (i.e. coud literally be one share undelivered) but the mere existence of it is mindblowing! Someone should be paying massive penalties and/or be in jail (as I'm sure would happen to "retail investors" if they were unable to deliver...)
That said, https://www.investor.gov/introduction-investing/investing-ba... notes you only get listed as a threshold security if a few criteria are met, one of which is that the amount failed to deliver must be:
> equal to at least 0.5% of the issuer's total shares outstanding
Based on 70M outstanding shares, that means at least 350,000 undelivered shares. We don't know _why_ there was a failure to deliver, though. Not all failures may be related to short selling - someone's system screwing up for mundane reasons could cause such a thing, with no malice required.
EDIT: apparently multiple lending of shares does happen and Overstock sued over this [1]
[1] https://www.courthousenews.com/overstock-com-settles-short-s...
Actually my example kinda sucked. What's more likely to happen is that B borrows the stock from A, then sells it to C.
C then lends the share to D.
C doesn't know or care that the share was already borrowed once, and the only way to prevent re-lending it that way would be to make shares non-fungible, which would break more-or-less everything (then again maybe that's your goal).
So you have 1 share, that's shorted twice. But it's impossible for A and C to both have their loan repaid, because there's only 1 physical share.
That all sounds perfectly ordinary, as long as it doesn't happen on a deadline. If you tell D or B that they have to buy that stock right now at any price, they're going to take it in the (ahem) shorts. But if they were permitted to take their time, they'd buy it up at the market price, which would on average be pretty near the price they sold it.
It just so happens that there is a mechanism by which they can be forced to buy that stock right now, which is when F decides just on a whim to pay 100x the market price, and protection measures kick in. That's a screw-up on the part of B and D; they got sloppy and deserve to get raked over the coals for it. Everybody who wants to play that game needs to be aware of that scenario, and now they are.
But I don't think it's because there's anything impossible about having more shorts than stocks. It just takes an already risky thing and makes it super subject to manipulation.
Naked shorting is not "re-lending", it's a very specific technical thing where you sell the stock without owning or borrowing it at all. Naked shorting results in failure to deliver.
Stock trades settle a couple of days after execution, so what it means in practice is that Alice "buys" the stock from Charlie, then 2 days later when settlement should happen and the share and money are supposed to actually change hands, Charlie goes oops I don't actually have the stock. Then the trade is undone.
In effect Charlie duped Alice into a fake trade that artificially depressed the market price.
It's an egregious market manipulation tactic and has nothing in common with the practice of lending or re-lending shares, in fact there is not a single share involved at all.
If you fail-to-deliver enough you'll get booted by other market participants and/or the SEC.