Good News & Bad News, page-42418

The shorters can manipulate the price down simply by selling small quanties a little below the current price. Computerisede trading makes this relatively easy. Everyone knows they do it but the regulators do not police it even though it is theoretically illegal. Once they see that sellers have placed large sell orders in fear of missing the possible gains that happened earlier in the day, they then buy. So long as they buy more than they have sold earlier they have a net covering process. They can do this on a regular basis (including repeatedly throughout the day) simply by having a well programmed automatic system.

The real question is "why isn't this form of share price manipulation regulated". My opinion (my opinion only, could be wrong) is that a proportion of the regulatory body come from "experienced" industry personnel who are happy to help their mates!!