I've seen a lot of "information" circulated about how to stop naked shorting, and as far as I know there really isn't that much that can be done about it. Because MMs can "transfer" the shorts back and forth between themselves, they can get around the rules requiring them to settle the shorts in a specified period of time. One way to deal with shorts, however, is to issue dividends. Whoever is responsible for the short (naked or not) is also responsible for the dividend. A shorter is content to sit on his short forever, but once he has to start ponying up hard cash he'll start to think real hard about covering. If SFMI announced out of the blue that they were issuing a dividend we'd be able to see pretty quickly how much shorting was going on as the shorts rushed to cover. It would be especially true if SFMI also announced that there would be more randomly timed dividend announcements coming... Most startups can't issue dividends, which is why they are especially vulnerable, but once SFMI starts generating a lot of excess cash it might be something for them to think about.