I believe it's more complicated. Per Wikipedia [0], > Failing to deliver shares is legal under certain circumstances, and naked short selling is not per se ill

I believe it's more complicated. Per Wikipedia [0], > Failing to deliver shares is legal under certain circumstances, and naked short selling is not per se illegal. There are arguments for why phantom (i.e., counterfeit) shares benefit the market. E.g., providing liquidity. Others contend that this practice is used in the aggressive short selling of companies, which is illegal, and there is insufficient transparency and accountability of this practice. There's a great story of supposed illegal naked short selling in the Global Links fiasco. [1] In this case, one investor was able to purchase 100% of outstanding shares while trading continued unaffected. This post's website also cover's that story and I don't recall how this mess was ever resolved. Briefly searching through sec.gov that didn't turn up anything relevant. [0] https://en.wikipedia.org/wiki/Naked_short_selling https://en.wikipedia.org/wiki/Naked_short_selling [1] https://www.forbes.com/2006/08/25/naked-shorts-global-links-cx_lm_0825naked.html https://www.forbes.com/2006/08/25/naked-shorts-global-links-...