Carson Block's Muddy Waters Capital to Manage Outside Money

  • Affiliate of Muddy Waters Research to start with $100 million
  • Block provides research on accounting, business fraud

Carson Block, the financial researcher who reports on business and accounting fraud, plans to put his expertise to work for outside investors.

Muddy Waters Capital, an affiliate of Block’s Muddy Waters Research, received regulatory clearance last week to operate as a money management firm, according to an investment adviser registration filed with the U.S. Securities and Exchange Commission. Block, 39, is starting with $100 million from one investor, according to a person familiar with his firm. Until now, Block has managed his own money.

The San Francisco-based firm registered with the agency through an exemption provided for money managers who oversee less than $150 million of assets.

Block is primarily a short seller, betting against stocks he expects to tumble. He made a name for himself with calls on Chinese companies, including NQ Mobile Inc., which has plummeted almost 85 percent since he said in 2013 that the Chinese mobile-service provider inflated revenues.

The new Muddy Waters fund may also make bets on stocks that Block expects to rise, said the person, who asked not to be named because the information is private. Last year, Block said he owned shares of Bollore Group, a French holding company. He said at the time that the stock could double in value to about 8.50 euros. The shares closed today at 3.76.

Block declined to comment on his fund.

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