I'm sure it varies from one shop to the next, but probably 90 to 95% of all the business being written as non-recourse involves stock pledged by executives in exchange for money.
But the administrative procedures are the same for the naked short selling that can be done, if you find the right candidates, in the pinks and OTCBB.
What you do is try to find someone who's may be trying to quietly accumulate a large block. You establish relationships with trading desks and, if you get the right character who's trying to accumulate a large position, they may be a decent candidate to take a contra position to your naked short. They might want attractive financing terms if they're looking to leverage, they might want to buy at a discount, or they may just want to take a long position without signaling the public with a block trade that crosses the tape.
As I've said before, there are as many different ways and reasons for these transactions to go private as there are buyers out there with goals that can't be achieved through traditional broker/dealers.
"The penny stock investor may be the most dangerous creature in the investment world, at least to himself.[...]His hypocrisy becomes most apparent when he then blames his losses on the greed of others." Robert C. Dugan, Director - JRM Capital