Whitey - 6:03 am on Oct 29, 2012 (gmt 0)
There are many examples on various forums referred to by top SEO's that demonstrate negative SEO is alive and well.
Many sites competing used links as a quick way to get ranking through commonly used terms and manipulative anchor text. Those are now stripped causing big losses in ROI for the sites that secured them - and there are many. Now that has turned even uglier with talk continuing of reports that this can spin a site on it's head and actually cause more widespread damage, bringing an entire site down.
Sites in competitive niches face fierce competition and likely have some pretty big campaigns in play to bring competitors down.
Perhaps branded sites alone with Google's "immunisation from anything penalty" can survive this destruction, but anyone else is much more vulnerable.
I believe the above reports to be true and correct , unfortunately.