Is it possible for a single share of stock to be shorted multiple times?
Concrete example:
Imagine we have five people with the following motivations:
Person A owns a share of company ABC and wants to lend it out to collect interest.
Person B wants to short one share of company ABC.
Person C wants to own one share of company ABC and lend it out to collect interest.
Person D wants to short one share of company ABC.
Person E wants to own one share of company ABC.
The following then occurs (in order):
Person A lends their share to Person B
Person B sells their share to Person C
Person C lends their share to Person D
Person D sells their share to Person E
This would result in 3 long positions of one share each, and 2 short positions of one share each, all based on one "real" share. If the above is allowed, you could imagine this occurring infinitely, allowing unlimited long and unlimited - 1 short positions, so long as the net equaled one long share.
Is this possible? Are there any regulatory or procedural systems in place to prevent the above from happening?