The drug dealer reference doesn't really fit here. Since there are only what..6 brokerage houses, (Schwab, Ameritrade, etc.), and you need to go through one of them to sell or buy stocks AND since they're heavily regulated and watched, (supposedly), by the Federal Government it's not possible for naked shorting to exist. Do you really think one of the brokerages is going to risk everything to make, (to them), a few bucks? Personally, I think that's ridiculous.