The SEC didn't find any evidence of naked shorts in the GameStop debacle. Some people confuse naked shorts - which are currently illegal - with the simple fina

The SEC didn't find any evidence of naked shorts in the GameStop debacle. Some people confuse naked shorts - which are currently illegal - with the simple finance fact that the same stock can be shorted more than once. Let's say A owns 1 stock. I borrow it from him and short sell it to B. Now I owe A one stock, and B owns one stock. There is no reason(1) I can't borrow that stock from B, and short sell it to C. I now owe A and B each one stock, and C owns 1 stock. You can continue doing this as much as you want, and create effectively infinite short positions without ever doing a naked short. (1) Well aside from the the practicalities that it overleverages you and if your short position gets called you are completely screwed, and eventually you might not be able to find any stocks to borrow for shorting purposes, but there's no theoretical reason you can't do this.