The short answer is “No”……it’s not legal. Recently, I’ve looked into the Robin Hood- Game Stop- Citadel Securities fiasco several years ago.
CDEL had long been shorting the stock, when a group of retail investors banded together, and started buying blocks of Game Stop. CDEL and other MM’ers were caught in a short squeeze…..and Game Stops price soared. I guess this activity caught the eye of the SEC, and eventually ‘transactions’ were temporarily stopped.
In a nutshell, it seems to me that an upturn in price was seen as manipulation, yet, the Hedge Funds rarely get slapped for price manipulation downward.