If you drive the share price low enough you can trigger debt covenants and possibly even bankrupt them before they can clear their name.

In the market, all moves have their countermoves. The way to avoid this one is to not go into debt. Companies whose capital is all equity and closely held are much less vunerable to short attacks. A clever company could even structure itself in a way that appears weak in order to draw in the shorts. I don't have any examples of this, but it does seem possible to me.

The one sure way to fight back is to be squeaky clean in everything you do. The fact that shorts are out there waiting to pounce is a pretty good incentive to keep it above board I'd say. More effective than some regulatory body making arbitrary rules about who can and can't be shorted.

I'm talking about legitimate shorting of course. You have to borrow the shares first. You can't just conjure them into existence the way it's done now. If that were true and enforced, I'd have no trouble lending my shares. It puts a floor under the price, and guarantees a buyer should I decide to bail when the unexpected happens.

ebear

SVM currently looks like it may be innocent.
TRE is a big question mark as nothing regarding the nature of the allegations has been made public yet.

Innocent or not may not matter as I suspect the hedge funds will continue their attacks and these companies will not be the last victims. There are no free markets just a rigged casino.