Any simple Google search will turn up hundreds of articles on naked short selling of penny stocks. There have also been court cases won again entities who have been caught naked short selling.

Here is a good article...

https://theintercept.com/2016/09/23/big-playe...ed-shorts/

Just because the law says they have to borrow shares doesn;t me they are doing it. If you think the SEC is doing anything about it you are also wrong in that matter. The corruption in stocks is rampant!