I didn't mean to start a controversial topic. Even though we may not like it, trying to manipulate stock prices is illegal.
My understanding is that it is the intent to create a short squeeze that is the problem. The actual actions that may lead up to a short squeeze may be legal, but if you do them with the intention of manipulating prices it is illegal.
If I get a chance tomorrow, I will ask one of the lawyers at my job what they think.
In the end, it is the fundamentals of the company that will ultimately provide the reward for the longs.
Here is one case that I found on the Internet.
http://dealbook.nytimes.com/2012/06/28/in-case-against-philip-falcone-a-warning-to-others/
The second complaint deals with what the S.E.C. describes as “an illegal ‘short squeeze’ – a form of market manipulation that occurs when a trader constricts the available supply of a security with the intention of forcing settlement from short-sellers at the trader’s arbitrary and inflated prices.”
...
Market manipulation can be difficult to prove because it requires showing that the investor engaged in the transactions with the intent to artificially affect the price of the securities.
