"Naked Short Selling or Naked Shorting is the practice of short-selling a tradable asset of any kind wihtout first borrowing the security or ensureing that the security can be borrowed, as is conventionally done in a short sale." wiki.
Regulation SHO be resumed with a 3% limit on shares out at a time, and a 30 day cool down on any stock - on any American Resident Exchange. Penalties for Naked Short selling failure to deliver be increased to 100X the amount failed to deliver as a tax/penalty, civil. All legal costs to be paid by the losing party, including the cost of the government to recover damages. The shorted company will receive X2 damages of the amount equal to the shorted stock and the government will take the remaining.
Effectively outlawing naked shorting fail to deliver.