I'm up early on a Saturday doing my weekly visit to the FINRA website. I see that two broker-dealers have decided to provide me with real-world examples of Reg SHO violations, and pay a total fine of $925,000 to FINRA. Remember that Reg SHO requires broker-dealers to determine that actual securities are available to be borrowed and sold short before executing a short sale. Stock prices are based purely on supply and demand, so if short sellers get to sell phantom shares short, that artificially depresses the price of a stock and distorts the market.
I'll let you stretch a little bit by reading the news release yourself at: