I don't really think they're being sued for shorting silver. I do think they're being sued for MARKET MANIPULATION.
When you have over 50% of the total available market short in ANYTHING can cause prices to fall!
I'd bet someone could short an amount equal to 50% of JPM total stock and drop it down to under $25/share... NO ONE is going to buy to keep seeing the price drop and the others sell. Sooner or later someone gotta settle up, unless you're JPM of course