Right naked short selling is illegal and all they have to do is enforce the rules. In fact all they have to do to enforce the rule is to make sure the brokers aren't allowing it to occur in the first place. My broker doesn't allow it; every time I've done a short sale, their software tells me beforehand how many shares are available to short and won't let me sell beyond that. What's sort of pissing me off is all this talk about additional rules on legal short selling--bringing back the uptick rule, idiots calling for an 80% tax on profits from short sales, etc.