Say all possible short shares are borrowed at 5% of the company.
Can you buy 1% of the companies shares then push the price up , lend the shares to shorts , who sell on market and drop the price, you rebuy the shares push the price up and lend the shares to shorts, you have 2% of the company, shorts stand at 5% + 2% = 7% .
1% of these shares are fictitious, making the float 101%. Say you repeat the process several times till your just below the reporting 5% ownership ( but are you still the beneficial owner if you have lent the shares? Do you need to report?). That leaves the short float at 10%. The total float at 104%. 4% fictitious shares. So someone sees the shorts increasing and searches hard for say another 2% which they borrow to short. So the total shorts go to 12% a third of which are fictitious.
Now you spike the price. Momentum traders come in. The market makers react by creating a bigger fictitious short. You spike the price again and a frenzy of momentum traders come on board. The shorts are caught made worse by well over a third of the shorts being fictitious shares. Price skyrockets, you call in your shorts, sell your holding at a huge gain, and borrow as many shares as you can get hold of as shorts abandon their positions , then as momentum wanes you short these shares price collapses, fortune made.
