"And if the company says they are being shorted the sec launches an investigation into the company not the market and fraudsters at fault"
Yep that action has been going on since at least 2005. Linda Thomsen (Director of SEC Enforcement) famously stated to her elitist audience,(paraphrasing) "the first thing we do when we receive a complaint about stock manipulation from a Co., we investigate the Co. not the complaint itself".