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Carson Block
Born (1977-04-27) April 27, 1977 (age 48)
New York City, New York, U.S.
Alma materUniversity of Southern California
Chicago-Kent College of Law
OccupationInvestor
Known forfounder of Muddy Waters Research
TitleFounder, CEO, & CIO of Muddy Waters Capital LLC
Websitemuddywaterscapital.com

Carson Cutler Block (born April 27, 1977) is an American lawyer, investor, short-seller, and the founder of Muddy Waters Research, an investor research firm and hedge fund.[1][2] He is known for alleging and documenting fraudulent accounting practices in publicly traded Chinese companies.[3]

Early life

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Block is a native of New York City, and grew up in Summit, New Jersey.[4] His father Bill Block was an equity analyst and ran W.A.B. Capital, an equity research firm that focuses on small cap companies, and his mother Grace Smith works as a MetLife database administrator.[5][6][4][7][8] His parents divorced when he was six years old.[8] Block has been an atheist since he was in second grade.[8] In middle school, he decided that he wanted to work in finance.[8]

He earned an undergraduate B.S in Business Administration from the University of Southern California ('98).[4][6][9] There, Block studied Chinese and Business (focusing on Finance).[4][6] He moved to China after college, in 1998.[10]

Block later returned to the United States, and worked in investment banking for nine months in 1999 for the Los Angeles office of CIBC World Markets.[11][12] He then went to work with his father during 1999 to 2002, a period he describes as “very embittering” as he was “lied to by a parade of management” of internet companies.[11][4][8][13][14] He quit equity analysis for law school.[4][8][13]

He then attended Chicago-Kent College of Law, from which he holds a J.D. degree ('05).[15][4][8] He is an adjunct professor at the law school.[9]

Career

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After graduating from law school, Block moved back to Shanghai, China, and worked in mergers and acquisitions and foreign direct investment for law firm Jones Day from 2005 until 2006.[4][10] He lived in Shanghai until 2010.[4][8] He left Jones Day and the practice of law to co-author a book with Robert Collins entitled Doing Business in China for Dummies.[4] He also established a self-storage business in China in 2007.[4][13][8][10]

He founded Muddy Waters Research, an investor research firm and hedge fund, and became known for alleging and documenting fraudulent accounting practices in publicly traded Chinese companies that were trading in North America, and as a short-seller.[16][3][4]

He targeted Chinese forest plantation operator company Sino-Forest in 2011, accusing it of overstating its timber holdings.[17] The company ultimately filed for bankruptcy.[17]

In 2011, Block was ranked as a 50 Most Influential Thinker by Bloomberg Markets.[18]

Block was featured in the 2015 book by Richard Teitelbaum entitled The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions.[19] In September 2017, he initiated a private lawsuit against Equifax, accusing it of neglecting to safeguard his personally identifiable information.[20] He appears in the 2017 financial documentary The China Hustle, outlining his research into securities fraud of Chinese companies through Muddy Waters.[21] In early 2018, he settled a case with St. Jude Medical Inc.[22]

As of April 2021, eight of the companies that Block had exposed as being fraudulent had been delisted from stock exchanges, and two other such companies had settled charges with their regulators.[8] Over the prior five years, Muddy Waters had annualized returns of 19% (after a management fee (2.5%) and a performance fee (30%)).[8]

In 2022, Block wrote a white paper entitled "Distorting the Shorts," in which he said that Columbia associate professor Joshua Mitts, who had authored research about short sellers which argued that some short activism was market manipulation, had written research that was “greatly flawed, possibly to the point of being fraudulent”.[23][24][25] He called the work by Mitts "a non-empirical, conflict-laden polemic based on misrepresentation, selective presentation of data, and lack of academic integrity. [24][23] He submitted the paper to the Securities and Exchange Commission, among others.[24][23]

References

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  1. ^ "Carson Cutler Block". Wall Street Journal Markets.
  2. ^ "Carson Block: The man behind Muddy Waters, a scourge of listed Chinese companies". The Economist. 7 July 2011. Retrieved 14 January 2013.
  3. ^ a b Weil, Jonathan (10 January 2013). "Big China Short Shows Downside of Kleptocracy". Bloomberg View. Retrieved 14 January 2013.
  4. ^ a b c d e f g h i j k l McMillan, Alex Frew (July 18, 2011). "Muddy Waters' Carson Block: 'I'm Proud of the Impact We've Had'". CNBC.
  5. ^ Lewis, Jane (August 21, 2019). "Carson Block: the world's most feared short-seller". Money Week.
  6. ^ a b c "Class of 1961". Brown Alumni Magazine. February 1999.
  7. ^ "Carson Block: a Short-Selling Superstar". Business Insider. December 17, 2012.
  8. ^ a b c d e f g h i j k Celarier, MIchelle (April 19, 2021). "The Rage of Carson Block". Institutional Investor.
  9. ^ a b Wachtel, Katya (June 3, 2011). "Meet The Guy Who May Have Just Cost John Paulson $500 Million In 24 Hours". No. Business Insider.
  10. ^ a b c Kapadia, Reshma (December 13, 2021). "Stay on Guard When Investing in China, Expert Says. 'Expect to Be Blindsided Again.'". Barron's.
  11. ^ a b Rodriguez, Juan Torres (June 27, 2022). "The Value Perspective Podcast – with Carson Block". Value Perspective. Schroders.
  12. ^ Hoffman, Andy (July 15, 2011). "Carson Block: The man who felled a forestry giant". The Globe and Mail.
  13. ^ a b c Shazar, Jon. "Carson Block's Effort To Avoid Becoming His Father A Serious Pain For Potentially Fraudulent Businesses". Dealbreaker. Retrieved 2020-03-31.
  14. ^ Anderlini, Jamil (March 20, 2012). "New kid on the block". Financial Times.
  15. ^ Kawa, Lucas (17 December 2012). "How Short-Seller Carson Block Became The Most Hated Man In China". Business Insider. Retrieved 14 January 2013.
  16. ^ Celarier, Michelle (February 12, 2022). "Are Activist Short Sellers Misunderstood?". The New York Times.
  17. ^ a b La Roche, Julia (February 18, 2016). "explains how he picks his targets". Yahoo.
  18. ^ "Bloomberg Markets Most Influential 50". Bloomberg L.P. Archived from the original on September 23, 2011. Retrieved 14 January 2013.
  19. ^ "Carson Block on the Short-Selling Market". Bloomberg. May 28, 2021.
  20. ^ "My $500,000 lawsuit over the Equifax cyberbreach is personal, says short-seller Carson Block". cnbc.com. 2017-09-17. Retrieved 2020-02-12.
  21. ^ Block, Carson. "Yes, China Does Cheat In Trade - The Rest Of The World Needs To Wake Up". Forbes.
  22. ^ "UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION AND REPORT BY EXEMPT REPORTING ADVISERS" (PDF). Archived (PDF) from the original on 2021-04-28. Retrieved 2021-12-07.
  23. ^ a b c Hoffman, Liz; Korn, Melissa (March 19, 2022). "Carson Block's Latest Short Target Is a Columbia Law Professor". The Wall Street Journal.
  24. ^ a b c Celarier, Michelle (February 23, 2022). "Muddy Waters' Carson Block Takes on 'Short and Distort' Author Josh Mitts The short seller's new white paper lays out the flaws and conflicts in the Columbia University professor's research". Institutional Investor.
  25. ^ Celarier, Michelle (July 12, 2022). "The DOJ's Short-Seller Probe Was the Star of a Debate Between Carson Block and a Former SEC Commissioner". Institutional Investor.
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