Short-selling: when is regulatory action warranted?

HOW should regulators deal with short-selling attacks, if at all? It's not an easy question to answer. There is hardly ever any clamour for regulatory intervention when strong "buy" reports with sky-high target prices send stocks shooting up. But there are always calls for gatekeepers to take action when a short-seller swoops into the market with a sell that (a) uses inflammatory language to make sensational claims about the target being worth much less than the current market; (b) causes worry and panic; and (c) is usually aimed at a high-priced stock that everyone thought was financially solid.

The reason for this disparity in the way buys and sells are perceived is, of course, purely emotional - rising prices are comforting because of their wealth enhancement, while …