Regulators everywhere (not just Canada) seem to have a history of going after those who expose fraud. I need to be more careful (e.g. apparently Canadian libel laws suck). So from now on, I won’t be so explicit.
While I will try to disclose if I have a position (long or short) in a stock, you may not want to read too much into it. Sometimes I will have a larger short position than I otherwise would have because I find management morally offensive. Sometimes I will have done very little research for a short position because my strategy is to limit my position sizes when shorting common stock.
Links / References
Selling America Short by Richard Sauer – I would highly recommend this book. Sauer gives a lot of insight from both the regulator’s perspective (Sauer worked as a lawyer) and from a long/short hedge fund’s perspective.
Daddy you are more evil than I thought – John Hempton of Bronte Capital writes about the ethics of (his) short selling and why he wants the fraudsters to keep doing what they do. He also explains why he often does not try to expose fraud:
Moreover talking about which stocks you think are frauds is a dangerous thing. Regulators sometimes (even foolishly) have been known to investigate short-sellers for telling the truth. (Being short Lehman Brothers and vocal about it was a good way of getting an SEC investigation for talking truth to power.) Also crooks sue short-sellers giving you nasty and expensive legal bills.