Not really. Market makers sell stocks naked short every minute of every trading day.
and keep borrowing the same shares over and over...
SEC & DTCC get a fee on each transaction, whether the stock is delivered or not (mostly not).
Little lawsuit to keep an eye on, at the Fed level, is filed in Florida - Universal Express v. SEC
This is a clear example of misinformation.
Failures-to-Deliver are being abused with the assistance of not only the DTCC, but the SEC, as well, and at a massive scale.
It was never intended that transactions take longer than three days to clear. But, because the DTCC caters to hedge funds over honest small investors, the DTCC fails to require short sellers to deliver the stock they are selling, refuses to collect the stock paid for by the buyer, counterfeits the stock, causing a host of problems, and refuses to return the buyers money when the delivery fails.
Brokers get their commissions, the DTCC gets its transaction fees, the criminal short seller gets the buyer's money, and the buyer, well, all he gets is SCREWED.
The ONE thing that you got right was that it is probably happening everyday, unchecked.