Here's an interesting discussion I was recommended over on Overstock.com. Basically, it refers to the practice of "naked shorting" or shorting a stock that you really haven't even borrowed, but have been allowed to buy and sell to maintain market liquidity.
Shorting a stock is the perfectly legal practice of "borrowing" a share (and paying a specific fee) that you think will go down in value, and sell it into the market. If you bet it will go down, and it does in fact go down, you buy that real share on the open market, and "return" that borrowed share to whomever you got it from.
"Naked shorting is similar, except it's undertaken by a "market maker" or some agent authorized by the stock exchange to buy and sell completely pretend shares to keep the market liquid at any particular time. The agent/market maker is supposed to only do this without making money on the practice.
The scam of naked shorting, though, is that market makers could (can? do?) continue to "pretend" to borrow the shares, as there appears to be no limit to the number of shares a market maker can claim to be selling, and drive the price down in a stock not so liquid, cover that pretend short, and make money without having done anything, and in fact, created the situation where they could make money off of a short in the first place.
The thread describes it much better than I have, but you get an idea of the type of environment people would be throwing their money into if privatization was in effect.
There are a couple of nasty contributing factors that I see. One is that this huge influx of money has to find some recipient. How will the market absorb that much money? What would that look like?
Second is that in that free-for-all environment, how is anyone to keep track of market makers who might engage in that sort of behavior, but attribute it to this new dynamic of retirement funds?
It's all pretty sketchy, but you can read about it here: http://forums.auctions.overstock.com/viewtopic.php?t=6405