I believe the founder of Overstock.com proved it by buying shares through his broker until the share count he personally held was equal to the number of shares indicated by the company as available.

He then noted that the stock traded several hundred thousand shares the next day and went with his broker's records and that info to the SEC and asked them how it was possible that those shares had traded when he himself (as owner of "all" the outstanding stock) had not traded anything the on the day in question.

He finally got their attention.

My opinion is the authorities in charge just don't care. The foxes in charge of the hen house care only about their buddies in the Wall Street banking industry. If naked short selling helps hold down the interest in gold so much the better. The FED and Gov't are in full accord with this.

Eventually the pigs in Orwell's Animal Farm changed the slogan "four legs good; two legs bad" to "two legs good; four legs bad." and while the populace (the other farm animals) recognized something had changed they weren't sure just what it was. Virtually no one with regulatory oversight has any principled sense of "right" and "wrong" nowadays. I don't expect this will change anytime soon.

Wall Street now has the entire world shouting, "for paper good; to gold bad." As a result little or nothing will be done about the criminal behavior surrounding naked short sales.

P.