U.S. Attorney Says Short Seller Convicted for Fraud, Not Lawful Trading

A U.S. Attorney stated on Tuesday that a short seller was convicted of fraud for publishing misleading statements that moved stock prices, then trading around the resulting movements. The prosecutor said short selling itself is not a crime and that lawful short selling depends on truthful research and market analysis.

"He used his reputation and public platform to artificially manipulate the market through misleading statements," the prosecutor wrote. Retail investors relied on the statements and invested in positions based on those representations, to their detriment, according to the prosecutor.

The prosecutor added that the conviction rested on the use of misleading public statements rather than on ordinary short-selling activity.