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> Let's look further at this short selling behavior as it scales.

I'm not talking about general short selling. I'm talking about this specific case.

He discovered the company was a fraud, shorted the stock, and then exposed it. That stock had to be sold, to someone else, for the short to be profitable. This means he knowingly participated in the scam.

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How is it a scam for a guy to do research on a company and then sell the stock when he decides said company isn't worth the current price. He isn't the person that made the company a scam, he just uncovered it. The poor sap on the other end didn't do as much research. Not they sellers fault. He can't be held responsible for the due diligence of every other investor in the world. That's basically what you are stating.

Every single stock transaction involves 2 people who think the opposite thing is going to happen. The vast majority of the time 1 of those participants knows more than the other.

Yup, hard not to see it this way.

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