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by kingnothing 2499 days ago
I wonder if that could be considered securities fraud. They had insider knowledge that their report would damage the stock price of GE.
8 comments

If you hold the stock and make a knowingly false statement about the stock in an attempt to move the market, particularly without disclosing that you hold the shares, it may be securities fraud.

The line is very difficult to draw between constitutionally protected speech and securities fraud. [1]

[1] - https://scholarship.law.missouri.edu/cgi/viewcontent.cgi?ref...

Prior to the initial distribution of this Report on August 15, 2019, the Company also submitted this Report to the U.S. Securities and Exchange Commission’s Whistleblower Program and the U.S. Department of Justice’s FIRREA Whistleblower Program. Both or either of those submissions may generate profits for the Company independent of the financial performance of GE and/or the securities, derivatives, and other financial instruments of, and/or relating to, GE.
Is it insider knowledge? Or merely non-public knowledge that they legally generated from their own research efforts?
If the information was synthesized from public knowledge, then it is fair game. Non-public is not determined by "how many people know this information".
Actually this is standard practice in the shorting industry and perfectly legal since the information is publicly available. It was entirely their goal to push the stock price down just as there are legions of folks trying to do the opposite (in perhaps not so immediately obvious ways).
Short answer: probably not unless they're willfully lying.

I posted a column related to short-selling a while ago. https://news.ycombinator.com/item?id=18017060.

>They had insider knowledge

No, as the author stated all of the information used is publicly available

To paraphrase Matt Levine - everything is securities fraud
So long as the information is public it's not insider trading.