There's nothing morally wrong with betting that a stock will go down. People do that all the time. Some arrive to the decision to sell short through diligent research that others have missed. That's the admirable way. But some try to drive down the price of a stock themselves and even enlist the aid of government to do a job on the company. That seems to be the case when a hedge fund manager hired lobbyists to get the government's help in the process.
The story can be found at Heritage. See How One Hedge Fund Manager Is Using Washington to Destroy a Company. Excerpt:
Ackman has pulled out all the stops. He convinced a member of Congress to send a letter to the Federal Trade Commission demanding an investigation. He paid for protesters to travel to Washington for a rally. He contributed $10,000 to the League of United Latin American Citizens, which then came out against Herbalife (the executive director eventually gave that money back). He lobbied federal and state regulators, including the Securities Exchange Commission and the Federal Trade Commission, to investigate.
He claims Herbalife is a pyramid scheme. But he doesn’t need to prove that it is. He just needs to use the power of government oversight to raise doubts about the company.
He even had a U.S. Senator doing his dirty work. No need to play the name-the-party game here, he was a Democrat. But to be fair, we really don't know whether anyone else was offered the bait and just didn't bite. In any event, crony capitalism is a symptom of an unhealthy condition. An accompanying condition is voter blindness.