It is IllegalSEC and IIROC prohibit the shorting of an issuer stock on pre-announcement of an impending private placement by people in hold of such inside information. For instance, RECO went as high as $10.90 before the private placement - at a discount - $9.50 was announced.
The regulators also prohibit the shorting of stock, post-announcement, from shares obtained through private placement. That would constitute “wash trading”. Any shorts must be covered by purchases in the market.
The total shorts at 2.5 million have more than tripled.