"Transfer agents keep records of who owns a company’s stocks and bonds and how those stocks and bonds are held—whether by the owner in certificate form, by the company in book-entry form, or by the investor’s brokerage firm in street name. They also keep records of how many shares or bonds each investor owns."
TA's keep track of the number of shares held aggregate in brokerage accounts and in certificates...they do not issue nor monitor corporate activities such as issueing or retiring stock...they handle the retail end of stock transfers between brokers, dealers, market makers, and individuals and then report that information back to the company. A transfer agent is used by a company to keep track of what is happening to their shares once released from or brought back to the treasury.
So, if there are naked shorts the TA would record those shares as held in brokerage firms...Thus, what is issued and what is outstanding can be two different things and in this case the abitrage would be the fake shares, aka the naked shorts.
Now, when a company does an audit they match the corporate records of issued shares and the TA's record of total shares "held in brokerage accounts" and "in certificate." If Urban knows he only released say, 70 billion shares and the TA is showing 400 billion held in brokerage accounts that would make him want to account for those 330 billion shares. How do you think he would he go about doing that?
Maybe Roger can answer that question in the upcoming days/weeks...