It seems to me that "activist shorting" for lack of a better term, is ethical if the activist is shorting based on public information. If so, then they are doing what any other investor could do. They could put themselves in an even better ethical position if they give the company a fair chance to correct the problem or to disclose it themselves.

What is public information? In my view, the nature of a product being offered for sale is public information, even if you have to do some leg work to gain that information.