Is it legal to short a company's stock and then blog about why you did it?

Question

In America, is it legal to short a company with which I never had any affiliation and then write a negative blog post about it affecting the company's stock price?

More specifically, suppose everything in this blog post is accurate, but kind of difficult to prove. Experts are needed to determine the truth, and the experts are, say, 9:1 in favor vs against it being true.

Can this company drag me through the courts for libel? Is there any kind of SEC violation possible here (stock manipulation, or something)?

Answer 1

If you plan to defend defamation with truth, the onus is on you to prove truth

Because truth is an affirmative defence, the onus is on the defendant to prove it, not on the prosecution to prove falsehood.

You mention in a comment that the CTO “admitted fraud”. If you were to accuse the CTO or the company of fraud (a crime, so defamation per see) you would have to prove it - ideally by pointing to the court judgement that convicted them. Or, by bringing successful criminal charges yourself. Fraud is not just a set of facts - it’s a set of facts that have been tested in court and resulted in a conviction.

Of course, if you just detail the facts without drawing the fraud conclusion then so long as you can prove each and every one is true, you can successfully defend a defamation case. Expert testimony may be relevant but 9:1 in your favour is not necessarily going to convince the court - they may find the 1 more compelling than the 9.

Answer 2

As long as what you are posting is factual, public knowledge then you shouldn't be in violation of any SEC rules. Short-selling in-and-of itself is perfectly legal, so is exercising your right to free speech, in so far as the things you say are true and known. Now if you made up some story about Musk and it caused the stock to fall where you gain, this could be a violation. Likewise if you have come to be in possession of private knowledge and blog about that, you could be in violation of SEC rules.