Yes, that is the whole point of the markets in fact and the reason we allow short-selling. You want information from both sides to be incorporated because it will give you much better price discovery. You want people to figure out that companies are frauds and to tell the world about it and to get people to do that you incentivize them financially by allowing them to go short.

Look at recent private fundraising and VC to see what can happen in markets with no short selling.

Wonder why VC firms don't come up with some structure to allow short selling?

If they believe a company will do well, yet someone else believes otherwise, there is money to be earned by whoever is right.

No, it is not illegal, nor is it market manipulation. Nor is it illegal to report positively on companies you're long on.

Everyone knows a hedge fund is talking its book. But that doesn't make its research or facts untrue.

Short sellers writing reports is an important part of the way securities reach more accurate prices.

This is implicit in your point, but it's a way to subsidize that research

Not if your report is true

Matt Levine has talked about this, too

Edit: got distracted but here's his link: https://www.bloomberg.com/opinion/articles/2018-02-09/can-no...

Also, I hate amp

Here's the relevant bit:

> "Wait," people ask, "how is it not manipulation to short a stock and then publicly announce that the stock is bad?" I am always confused by this complaint. Just flip it around: It's not manipulation, surely, to own a stock and then publicly announce that the stock is good. That's like half of financial television. It is also a big chunk of what corporate chief executive officers -- who all own their companies' stocks -- do. It's fine to short a stock and trash the company, or buy a stock and praise the company -- as long as, in each case, you're telling the truth.

"It is also a big chunk of what corporate chief executive officers ... do". This is a small example of how most of Mr. Levine's writing is reductive to the point of being crude.

Executives are allowed to advocate for their companies. But only with information that has already been publicly disclosed. Don't believe me? How did the SEC feel about Elon Musk tweeting non-public information about his public company?

Mr. Levine is correct that this action by short sellers is legal. But that part of his analogy is wrong. He could have ended the analogy with "That's like half of financial television." However he chose to add on a point that is not applicable to the situation.

For a long time I enjoyed Mr. Levine's writings. Until I started to read his opinions on topics in which I have domain knowledge. At which point I realized his writing lack nuance and offers analogies that feel cut & dry but are anything but.

I realize this is true of many opinion writers. But Mr. Levine enjoys a great deal of notoriety for opinions that lack sophistication & rigor.

> How did the SEC feel about Elon Musk tweeting non-public information about his public company

While executives are encouraged to report market moving public information in a standard format, that's not why the SEC took issue with his tweets

His tweets about taking Tesla private at some valuation above its current stock price were completely false (eg "funding confirmed")

Once again, the requirement of truth rears its head

> As the Second Circuit wrote in 2007, “To be actionable as a manipulative act, short selling must be willfully combined with something more to create a false impression of how market participants value a security.”

https://clsbluesky.law.columbia.edu/2019/03/18/short-selling...

Not a laywer, etc.

If it's legal to praise a company you own shares in, then it's legal to criticize a company you've sold short.

This is not always true...

If you're an insider (i.e., involved in management or have access to non-public information), then you can't simply praise the company you own shares in if the praise would be fraudulent.

Similarly, if you're a short seller, you can't simply make negative shit up--your criticism of the company must be grounded in facts or information reasonably believed to be correct.

"Everything is Securities Fraud"