“There is nothing illegal with selling a stock short.”
Well there is a restriction on naked short selling, that is when a stock is sold short without borrowing it first.
That’s how you get 140% of the float sold short.
It’s more than that from what I have read. It’s how you get over a 100% short ratio.
A broker allows shares of a stock to be “borrowed”, only to be sold (short selling). Those sold shares then are available to be “borrowed” for a second time and ultimately sold again.
In theory, there’s no limit to how many times the shares can be borrowed/sold, as part of a short selling strategy. I’d not be surprised if the big hedge funds work together to sell each shares that are already borrowed/sold to increase the spread.
It will drive you crazy trying to figure out what the hedge funds are doing.
So, the people that did that need to go to jail.
Why is this so difficult for people. If we enforce the rules we have, this crap could be avoided.