Naked short-selling Ban SEC or IIROC have banned naked shorting since 2008. The naked shorting is still going on with one-eye open and one-eye-close. As long as the brokers say they have shares available for borrowings. In the case of Reco, at an interest rate of some 20 percent. For instance, GameBoy shares were short 140 percent in 2021 - more than the total float. How the hell did that happen ?!
I believe the Co founder and key insiders were shorting Reco against the box. Since they own the shares, it is not considered naked shorting. Both IRS and CRA however deemed such shorting as "constructive sale" meaning it is considered an outright sale and taxes are due. Why they do it ?? Well, so they don't spook the market that the founder may have dumped millions of 4 cents stock or the key officers have dumped shares after exercising options granted at 25 cents. Since they are shorts and not reported on Insiders Report. The shorter names are not known.
Shorting is the least of investors worries. It is those insiders
dumping a large amount of shares while touting the inflated stock with misrepresentations that constituted a fraud on the public.