I believe that in Canada they are legal to sell "naked". That is they do not have to actually produce the shares other than indicate that they intend to provide them sometime. By this time they have repaid the account with shares purchased at a lower price. This effectively dilutes the share pool and if they can drive the price down far enough and long enough, and a company folds, they walk away without having to replace anything and keep the proceeds tax free.

It is a great scam for the financial institutions but pretty tough for the companies and retail shareholders who are looking to increase their value with a successful investment.

S.