Lately, I've been thinking a lot about the opposite of naked short-selling: naked buying. It's easy to point out that you can't sell more than the outstanding shares in circulation. But the same logic doesn't seem to apply when it comes to buying. Suppose that XYZ issued 100,000 shares to the public and I happened to have bought the first 90,000. I am a buy-and-hold investor who plans to hold my position in perpetuity. One day, the stock price soars and the volume swells ten times its average daily volume. [By the end of the day, it's been secretly revealed to me that more than 10,000 share were in circulation.] Now, technically speaking, you can't buy anything unless someone is willing to sell, and you can't sell what you don't already have. So the only way you can buy is when somebody essentially engages in "naked short selling". Hence my question. Is it considered illegal to conduct naked short selling when the market is plunging but perfectly legal in a rally? Perhaps I got this all screwed up. I don't know. Maybe someone who's more astute in these matters could point me in the right direction.