Short and Distort

Short and distort is a form of securities fraud in which an investor sells a stock short and then spreads negative rumors about the company to drive its price down. The scheme often relies on naked short selling, selling shares the perpetrator has not borrowed and does not intend to deliver; once the rumors depress the price, the perpetrator buys back more shares than were originally sold, using some to cover the short position while selling the rest, pushing the price down further. The technique exploits media relationships to manufacture a false narrative that manipulates market perception and artificially lowers the target company's valuation.