to play devil's advocate, assume there is massive (naked) shorting... to do so requires making a market in the security and market maker's do NOT take big risks. In every instance where it almost seemed believable (and in one where I fell for it), a market maker was either representing or playing against an 'investor' in the company that held convertible debt. The 'investor' was selling into pump and dumps, then converting at a discount to the low bid in a time window, making huge bank on their investment. Not really a naked short, because they were covered by the convertible. Still there is no way anyone but the market maker knows what that trade was.
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