[loandigger]

Normally, when you short a share, your broker has to go find somebody who already owns it and they "borrow" it from there and allow you to "sell" it short. But if you can believe this, the very, very largest Wall Street firms, (Citadel, Sigma2, etc.) those with trillion dollar balance sheets got a special exemption from the SEC : rather than having to "find" shares to borrow, they can "manufacture" shares, using their massive balance sheets as collateral. This is how 140% of GameStonk can be shorted. It is this unfair playing field that r/wallstreetbets is fighting against. Since the short exceeds the float, it is possible that there could be an "infinite" short squeeze, that even if they took the company private by buying every available share, there would still be another 40% outstanding they would have to cover. HOLD!

[mcv]

I didn't know about this special exemption. I thought it was just that B borrows a share from A, sells it to C, and then D borrows the same share from C to sell it to E. That way a single share has been shorted twice, and both B and D need to buy that share to pay back the loaned share.

So R quickly buys that share from E and refuses to sell it. Now B and D are screwed, because they both desperately need that share to pay back the loan that's about to run out tomorrow.

[perl4ever]

https://news.ycombinator.com/item?id=25935959

[thefiregecko]

Do you have a source for that special exemption? Or even just keywords I can search for?

[loandigger]

https://www.euromoney.com/article/b1320xkhl0443w/naked-short...

[loandigger]

http://counterfeitingstock.com/CS2.0/CounterfeitingStock.htm...