It's not that it isn't reported, it just gets ignored. The problem is at the MM level because they are given more latitude (extra time) to produce shares since they also have the responsibility to make the market and provide liquidity when possibly none exists. This is how the phantom shares come to exist, happens across all tickers to a certain extent. MMs treat shares like cash on a credit card, constantly borrowing against it and repaying on a very short-term basis.
Except in some circumstances they extend the borrowing when they shouldn't. And no one calls them on it. Until now.
The one thing I believe should be changed with shorting (side from stricter oversight and enforcing existing rules) is the way cost basis is calculated for tax purposes. Currently, if a company goes BK while you have a short position and the shares are dissolved you don't have to pay any taxes on the money you received in the shortsale to open the position. Because the position is never closed.
That is the main thing that contributes to shorties trying to drive companies out of existence. They effectively close their position at the expense of the company and all the shareholders, simply for the tax advantage. And our federal government has allowed this for 100 years without closing the loophole.
Otherwise shorts provide a valuable check on the market. They provide liquidity in what would otherwise be a never-ending bull market where you could only ever sell to someone who thought price was going higher. That market dries up when a company tops out or does something stupid and no one is buying shares at that price anymore. But I guess some people think it's completely ethical and MORAL to keep pumping to get their money and turn someone else into a bag holder.
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