Did you mean naked short sellers? There is nothing illegal about shorting if your broker makes sure that they borrow someone else’s shares for you. More often than not I am prevented from shorting because my broker can't find shares to borrow. I desperately wanted to short A123, the green energy battery maker, one of Obama's investments, but Fidelity could not find shares to short ever so I could not. It was a shame because they eventually went bankrupt which means I never would have had to cover. It would have been 100% profit.
It is often the case that the companies that are clearly headed for bankruptcy cannot be shorted because so many shares are short that your broker cannot find shares to borrow. The first guys who see the writing on the wall short everything that they can leaving nothing left for us little guys to short. However these are the most profitable shorts. It seems unfair in a way.
If you are thinking about buying a stock that is beaten down really bad you may want to see if you can short it first because if you can't you probably should not buy it.