[parsimo2010]

You seem to be hinting at the idea that naked short selling should be illegal, which it has been for over a decade. So here’s a minor clarification for you: The short interest (140% or more for GME) is calculated on the public float. There is a significant chunk of GameStop shares that are not publicly accessible, but could be borrowed against (the shares do exist). If you consider the total outstanding shares of GME, then only 99% or so of the company was shorted. So it’s a crazy high amount, but there is no proof that any (actually illegal) naked short selling was occurring. So long as the people holding the non-public portion allowed their shares to be borrowed, then nothing illegal is going on. If, in the unlikely situation that EVERYONE needed to close their short positions at once, these non-public shares could actually be sold if the owner wanted to. Of course, they could dictate a really high price if the public market volume isn’t enough to close out the short positions in the standard three day period.

The reason that short interest is calculated on public float is because that makes the most sense for normal situations. We just happen to have stumbled into one of those unusual situations.

[mox1]

GME stock has been on nasdaq's "failed to deliver" list for about a month now. That means someone sold a GME share they didn't own (short) and failed to give it to the new owner within the correct timeframe (3 business days I believe.)

Guess what the SEC has done about this blatant naked short selling. Nothing.

So while in theory naked short selling is illegal, in reality it is tolerate and allowed.

[esrauch]

Can you explain how it's possible that 99% of shares were held by owners that were willing to loan their share? Surely at least 2% of GME was owned by "regular people" whose shares just sit in their brokerage accounts?

[dragontamer]

Those brokerage accounts loan the shares out and collect some interest %%% while waiting.

The shares don't have your name on it. It has like Robinhood's name on it, holding on behalf of the customer.

[esrauch]

I was completely unaware this was a thing: that means there can be a "run on the bank" if all of the customers wanted to sell on a short time period, and they don't actually have the shares to cover the sales?