Short selling itself isn't a scam. Knowledge about short positions is in the public domain, if people then chose to invest they do so knowing the risks, and knowing they are betting against professionals. Let the buyer beware. Selling shares that don't exist though should be illegal and result in jail time. You wouldn't be allowed to sell a car or a house that didn't exist. The only moral objection I have against shorting is it can artificially hold down the value of a business by discouraging investment and holding back recovery.