There has been a lot of talk--and probably a government investigation--about whether short sellers powered Bear Stearns out of existence, barraging it with rumors and innuendo that took on a life of their own. It's unclear what the answer is. The extent to which bear raids take place is unclear. There are many who believe that short selling hedge funds work to gang up on a company, especially if it has negative information. The Biovail incidents come to mind. Two academics have weighed in suggesting a way that bear raids might occur and actually harm a company. We'll see what the government turns up. It may be that some traders spread rumors. They likely want a quick pop, not the destruction of the company.

For more:
- here's the article from TheStreet.com

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