SEC Whistleblower Short Sellers

The position that short sellers should be denied the benefits of their critically important whistleblowing efforts is short-sighted and contrary to the notions of our capitalistic markets. Moreover, it will serve only to disincentive a vital constituency of the SEC Whistleblower Program, which, in turn, will degrade the effectiveness of the SEC's enforcement program.

Short sellers conduct their analysis of suspect companies from the "outside" through the review and dissection of publicly available information, including company's financial statements, SEC filings, industry trends and engaging in sophisticated market analyses. Unlike traditional "insiders" who have personal knowledge and, in some cases, documentary evidence of the illegal securities conduct, short sellers must invest substantial time, due diligence, human resources and financial capital in uncovering and identifying red flags that strongly suggest that publicly traded companies are engaged in ongoing federal securities laws violations. Quite often, short sellers are successful in uncovering massive accounting frauds and stock manipulations, the bread and butter of the SEC's enforcement program.