While that's not necessarily proof of naked shorting, Goldman and Brad Halvorsen, an analyst with NorthPointe Capital, a large holder of Imergent, say there's no other reasonable explanation. Various technical maneuvers can temporarily inflate the number of ghost shares, but at some point, all positions have to be covered. That so many shares of Imergent have not been delivered is suspicious, they say, and is apparently the focus of an investigation by the NASD, which handles some regulatory matters for the Amex. The exchange refused to confirm the existence of the investigation, but three sources close to the company say it is under way. Since January 2005, Regulation SHO has required stock exchanges to keep a "threshold list" of securities that have a sizable failure-to-deliver position. Naked short-selling isn't necessarily illegal . Broker-dealers may sell imaginary shares to maintain liquidity in a stock that sees a sudden surge in demand. And it's not unheard of for a daisy chain of short investors to borrow, sell and reborrow shares of a stock so many times that the number of positions held is greater than the shares outstanding, says Darryl Duffie, professor of finance at the Stanford Graduate School of Business. What is illegal, though, is knowingly creating a short position with a stock that a broker has no ability to deliver. While Regulation SHO was supposed to eliminate that practice, a glance at a list of threshold stocks compiled by buyins.net shows that Imergent is far from the only stock that is apparently being raided by naked short-sellers. As of last Monday, 16 stocks, including Imergent, have been on the list for 111 days or more, and 50 stocks have been on the list for 25 days or more. Duffie says regulations forbidding illegal short-selling are adequate. But enforcement, he says, may well be another question. The tug-of-war between Imergent's long and short investors, and the company's wrestling match with state regulators, are good reminders that not every story on Wall Street is transparent. The company's stepped-up sales efforts and aggressive PR campaign may change Imergent's image, but for now, it still looks like bear bait.