Even more hostile scenario (if this is even legal, probably not, though I'm not sure):

Apple could borrow a large amount of shares of Masimo and short the company.

They have enough cash for that, and the borrow fee might be less than the settlement costs, plus they could profit from the operation.

If you mean shorting Masimo purely to drive down the price, that's market manipulation and is definitely illegal. E.g.

https://www.investor.gov/introduction-investing/investing-ba...

Your link doesn't support that assertion.

https://en.wikipedia.org/wiki/Hindenburg_Research would be out of business if that business model was illegal. You can short all you like; you can't be deceptive/fraudulent about it.

Hindenburg doesn't short in order to drive down the price.

Hindenburg compiles and releases information they believe to be truthful about a company, which they shorted beforehand in order to profit from the information.

What I am talking about is sending orders only to cause a certain reaction (e.g. by convincing momentum traders that there is momentum in a certain direction).

You can short for the sake of shorting. You can’t fake volume with wash trading. Very different things.

Wait. How does that help them sell Apple Watches? Like actually do the whole trade here for me so I can understand.