Bloggers operating in grey area
Anonymous bloggers engaged in short-selling appear to inhabit a grey area of the law. In the United States, it is illegal to communicate for the purposes of manipulating share prices.
'Although there is nothing illegal per se about posting or communicating anonymously, it is a violation of United States federal securities and wire fraud laws to communicate anonymously, or even in-name, for the purpose of manipulating upwards or downwards the price of a stock,' said Jacob Frenkel of US law firm Shulman Rogers.
Hong Kong has similar rules on disseminating information, said Allen & Overy partner Simon Clarke. 'The information disclosed has to be false or misleading,' for it to be illegal, while also being designed to induce trading in a security, he said.
William McGovern of Kobre & Kim said he suspects anonymous bloggers are targeting more US and Canadian-listed Chinese firms than Hong Kong-traded ones as Western regulators would find fraud claims hard to probe. 'The distance, the language gap and the lack of familiarity with Chinese companies could make things difficult for regulators anywhere ... outside China,' he said.