If you were not a Fortune 500 company they could short you out of business if they wanted to.Can you think of an example?
Overstock.com claims to have been hammered by naked short selling, i.e., short selling without borrowing the shares first.
I will check it out.
I am a retired investment banker but of course the securities business is more than just IB.
In my 25 yrs of experience, I have not encountered a case such as the one you mention but that doesn't mean it doesn't exist. I found the folks in my business to represent human beings of all types...some were fanatically ethical, some less so. Some were amazingly creative...most were followers. All were opportunistic!
In retrospect, I wish I had gone in another direction. But most of us would do it differently if we could do it over again.