A federal criminal investigation into short sellers has spawned a behind-the-scenes feud between a law professor whose research is helping to guide prosecutors and one of the most prominent investors in their sights.
Carson Block, known for public broadsides against companies he suspects of fraud, has been waging a campaign to discredit Joshua Mitts, a Columbia University law professor who has been aiding the U.S. Justice Department in its investigation into whether short sellers use illegal trading tactics to drive stock prices down.
Prosecutors have subpoenaed trading records and electronic communications of several hedge funds, and FBI agents seized Mr. Block’s phone in October, The Wall Street Journal has reported.
Since then, Mr. Block, the founder of Muddy Waters LLC, has publicly accused Mr. Mitts of academic shortcomings, privately urged Columbia to investigate him and challenged the professor’s findings in a research paper of his own. It is a tactic from Mr. Block’s investing playbook: Launch an attack highlighting alleged corporate wrongdoing, get regulators—in this case, Mr. Mitts’s bosses at Columbia—to take notice, and see if any of the claims stick.
Mr. Block wrote last month to Columbia’s head of human resources urging the school to investigate Mr. Mitts’s research, as well as his paid consulting work for companies targeted by short sellers.
