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Shorts do not create shares that way; they're shares that have been borrowed, which means they've temporarily changed hands. Consider for voting. If you've borrowed shares from someone else over the time period that determines voting rights, only one of you gets to actually vote - you haven't magically created new votes in the process.

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The shares are borrowed, but not always with the knowledge of the original shareholder. So should one owner get excluded from the fine just because their broker happened to loan out their shares and not the shares of another equally eligible holder? Opposite thing happens with dividends and the original holder is still entitled to those.

(And the original holder is due the dividends because the short is required to pay the dividends.)

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