You seem to have a great deal of faith in regulators. In most cases, they're under resourced, outgunned by corporate lawyers, and may have a bunch of different incentives to look the other way. Even if they do find egregious wrongdoing, many times bad actors will get a slap on the wrist or it'll be blamed on a single individual.

If you're curious, read Fooling Some People All of the Time by David Einhorn, who ironically, is short Tesla.

Why would they dig deep? Tesla has had many documented, self-inflicted execution issues with nearly every single one of its mass-produced cars. Tesla's done far more damage to itself than a single saboteur ever could.

> Why would they dig deep?

Whenever an outsized high-risk position pays off, multiple regulators--at the SRO, state and federal levels--investigate. Mostly for insider trading. Sometimes in response to investor complaints or broker arbitration proceedings.

These are well-paid professionals at the SEC, CFTC, FINRA, state financial services regulators, Federal Reserve, OCC, Treasury, and a bajillion other acronym agencies. Some of them are there while they wait for something better in industry. Many eye an administration appointment or political office. These are motivated people with comprehensive data across multiple markets, all tied to the natural persons behind accounts.

Corollary: One will notice that most insider trading busts happen to mid-level employees at publicly-traded companies. Not traders or hedge fund managers. A large part of this comes down to the general public having no idea how competent securities regulators are. So while someone in the industry would never e.g. text about insider trading before buying out of the money options in a relative's name, Midwestern CFO's daughter sees nothing risky about that.

I don't think "outsized" is a factor here. How invested is the plurality shorter here? Maybe $10 million? One-thousandth, even one-hundredth, of a market position doesn't sound like an "outsized" investment to me.

> I don't think "outsized" is a factor here

I originally criticized the notion of a short seller sabotaging Tesla to make money. The moment you reach the scale where it makes sense, it also becomes easily discoverable.

Would sabotage qualify as insider trading? Has it happened before?

On some level I find it odd if the insider trading turns out to be the worst part of sabotage.

Serious question: would the penalty for sabotage be greater if it came with a short-sale payoff? Is sabotage somehow considered insider trading? I can see some kind of vague fraud charge, but is there a specific law that punishes sabotage more harshly if one financially benefits from it?

> I can see some kind of vague fraud charge, but is there a specific law that punishes sabotage more harshly if one financially benefits from it?

Not sure. My point is one's odds of being caught go way up if the sabotage is twinned with securities transactions.

Nobody scans for sabotage. Many agencies scan for insider trading. After a corporate event, e.g. an earnings revision or surprise, thousands of automated systems look for trades that were unusually (a) profitable and/or (b) large.

To make sabotage worth it, one would need to enter into trades that are (a) small and unusually profitable or (b) large and usually profitable. Those trades will get flagged by systems designed to catch insider trading. That, in turn, will result in a human trained to spot unusually-clairvoyant trades reviewing the case.

There are many reasonable motivations for sabotage. But for all of them, the gains must outweigh the operation's cost and risk. Short-selling gains don't make the balance.

That figure is cummulative shorts not a single holding.