I guess I should have done more looking before I posted. I answered a few of my own questions with the following. "David Rocker is managing general partner of Rocker Partners, L.P., a New York hedge fund that he formed in 1985. (Rocker Partners owns 9.8% of TheStreet.com.) Prior to forming the partnership, he was a general partner in Century Capital Associates, a registered investment adviser, managing more than $600 million in assets." This quote is from the following link. http://biz.yahoo.com/tsp/021003/10045839_1.html
It works like this: Rocker owns a long position and a short position in NLS. We only see the long position. Rocker sics Herb and Cramer on NLS. The stock tanks and Rocker sells his long postion while the price is in freefall and ends up uncovering his short position. Is this legal?