Fails happen for boring reasons: a recall landed late, a transfer agent was slow, a security was hard to source, a mistake was made. They are reported publicly twice a month with a lag, per security, as a cumulative balance rather than as new fails.
Rules require close-out within a set number of sessions after settlement, sooner for a threshold-securities-list name. Interpreting raw fail data is harder than it looks: the numbers include long sales and market making, and they are a balance, not a count of naked shorts.
Example: a stock shows a 640,000 share fail balance against 5M daily volume, 13% of a day. A related etf shows fails too, because a market maker hedged and delayed delivery of the basket.
Related: naked-short-selling, threshold-securities-list, regulation-sho, buy-in, t-plus-one