Want to vomit? Give this story a read. It is a little hard to get your head around, and the points that are maybe) relevant to this story are made as conclusions to the paper. At least read from pages 52-57. (Don't worry, the paper starts on page 46).
Basically this author (using American markets as examples) walks you through the process of naked shorting, the creation of shares that do not exist, and its' impact on corporate governance (voting). Essentially, should there be a large naked short position that has basically "created" extra shares, through market and brokerage "practices" all votes that are cast are counted and then diluted to make the proper amount of shares cast. This abuse can make a share worth less than a share for the purposes of voting. And enhance someone else's voting position very unfairly. I would argue fraudulently.
I read this article for the first time several years ago and what I am seeing now brought me to find it and read it again. I would love to have people weigh in on this. Am I alone in being somewhat p#ssed off that this mechanism can't be shut down by regulators? Seems like it should be easy enough to do...