Jim,
I happen to disagree and here is my reasoning. It's just like 8 or 10 years ago in the brittish marketplace when shorts naked shorted copper and when they couldn't delivery declared force de jour and were allowed to settle in paper. Those expecting copper and contracted for a manufactured product beyond that on the expectation of physical delivery had to renege on those contracts as a result.
Just allowing them to settle in paper is not sufficient settlement or judgment. A significant removal from the marketplace is appropriate justice. Otherwise, the naked shorters know worse comes to worse they are rewarded with paper settlement.
The commodities or any market should not be the playground of banks. It's there for producers hedging etc and realistic price discovery.
In the real world, you go to jail for selling what one does not own.