This is a bullshit argument. If a company falls apart, its equity value will crumble, short sellers or no short sellers.<p>Short sellers simply drive the price action faster. That's probably not a good thing for the equity holders, nor does it serve a function that wouldn't get handled without short selling enabled.<p>If something is worthless, people will figure it out organically and the price will follow. You don't need selling pressure by non-holders to get there. In fact, you don't need selling at all. Companies that fall apart don't go to zero by selling pressure, but by lack of buyers at the erstwhile price.
Yes, the best reason why short sellers short a stock is because they find something fundamentally incorrect about the mainstream perception of a company.<p>But, what happens when shorting is the mainstream perception? That is when they get squeezed. Except.. unfortunately, there's no other sheriff in town.
The article admits that the research was done by a third-party and not the short sellers. Why didn’t they just release the report, or share it directly with the SEC? I don’t see how the short selling was necessitated to expose the fraud...?