I just started thinking about if somehow they were limited by the A/S or that the very definition of naked shorting means there are no bounds at all. To be extreme in this case that they sold 3B shares when only 2B are really available.

Of course that would drive the stock down, completely exceeding the true supply and demand. I can now see where the " short squeeze" could wreck them if a very positive event or news unexpectedly drove the desire to own the shares up with large positive volume.

In that case there must be at least some ethical check and balance in place to force them to have the required number of shares they sold and to prove it.