I never understood why shortselling is legal, but have been told there is some market friendly reason for it.
They claim they make poorly run companies show better discipline etc. That they are like predators only going after the sick and weak.
But they forget to point out, when they short, they call their biddies at the IRS, FBI, SEC, at the WSJ and NYT, etc etc. They make accusations of product problems, poor management, accuse various illegalities, trying to get investigations started, etc.
They bet the stock will go down, then use politics to drive it down.
See also, “Mitt Romney”.