Federal investigators have been searching for evidence of a bear cartel among short sellers with surprising questionnaires to the short sellers. They have asked the group of short sellers about their trading in stocks such as Microsoft Corp., Amazon.com Inc., and JPMorgan Chase & Co. Subpoenas have been sent to the same set of short sellers by the US prosecutors, asking them about details of their transactions in the blue-chip stocks. These short sellers had earlier taken a position in many lessor known stocks and had also answered the questionnaires on them. The demand was to look into how the bear investors collaborate to publish research reports on companies where they take positions intending to make profits when the stocks fall. Data Evidence The demands made by the authorities are backed by evidence that investigators are amassing a large amount of data. In December, the requests became public after the investigators collated information transactions of more than 50 stocks and a host of information on dozens of researchers and investment companies. Investigators sought evidence of activist firms that manipulated markets with stock drops through various strategies. The latest request by the authorities on the blue stock exposures by short sellers is baffling because short sellers do not usually target the most valuable companies. Giant companies like Microsoft, a software powerhouse, Amazon.com Inc., the biggest retailer, and JPMorgan Chase, the largest US bank, closely monitor their stocks. The share prices of these blue-chip stocks are linked to index-tracking funds and institutional investors who invest in pension funds for long-term investment purposes. These market intermediaries on the prices, and there is no reason for them to be short sellers. This leaves opportunity or room for short sellers to hammer down the prices with bearish forecasts in these stocks and make a killing out of it. Smaller company stocks do not attract much attention from index funds and market professionals. Their trading volumes are thin, and they are vulnerable when short sellers show evidence of corporate mismanagement, which drives investors away out of fear. James Cox, a Duke University Law school, said that data culled last year by the investigators revealed something about the mega-cap stocks. This prompted them to issue subpoenas in the first round of questioning to investment firms and individuals. According to Cox, it was not surprising that investigators have come back with another round of questioning, which reflects a learning curve for the authorities, especially in market manipulation cases. The Securities and Exchange Commission and Department of Justice are conducting parallel investigations. The spokesperson for them declined to comment. Representatives of Microsoft, JPMorgan, and Amazon also did not comment. It is unclear what type of trading patterns investigators are looking for. It could look like abusive short selling where traders submit and cancel orders rapidly and misguide the market, or there could be matching orders among the cartel that looks like setting prices and inflating volumes. No one has been accused of wrongdoing, as mere investigation does not mean any claim can be brought. Further Reading \t Stocks 101- Everything About Investment and Trading \t Penny Stocks to Watch as the Cryptocurrency Market Heats Up \t Is the Stock Market crash inevitable?