According to an article in Bloomberg from June 2021, 2 indicted Israeli suspects in ongoing insider trading charges have strong links to Carson Block
Two Israeli men accused of being involved in an international insider trading ring in the US have been confirmed as being close personal associates and business partners of Carson Block, the founder of Muddy Waters LLC.
Block alleges that he was approached separately by the two men in 2010 following a short-selling report he published on a Chinese company. Dov Malnik and Tomer Feingold both claimed only to be vaguely familiar with each other in conversation with Carson. Still, it was later discovered that the two men were close.
A Long-Term Relationship
According to official reports, both men played critical roles in the early years of Muddy . They participated in field research and trading—some of their work involved contributing to reports on Sino-Forest Corp. They became close professional and personal partners with Mr Block. However, official stories by both parties as to what caused the breakdown of their relationship vary.
As previously stated, it is alleged that between 2013 and 2017, the two men received large amounts of confidential information as a result of their work within the company, which they then used to set up shell corporations in the British Virgin Islands and began making millions worth of illegal trades. The fact that the company in Geneva was established around the time the relationship began to break down is considered by many people to be deliberate, all to obfuscate the real relationship between the trio. Both Israeli men were eventually found and extradited to the US.
One of the investors was charged with 14 counts of security and trading fraud, as well as one count of concealing conspiracy to commit money laundering.
Muddy Waters Founder Carson Block Served Search Warrant by Department of Justice
Meanwhile, in an act the might seem unrelated from February 2022, Carson Block, the founder of Muddy Waters, has been served a search warrant as part of an ongoing investigation by the Department of Justice. According to a report published in the Wall Street Journal, the warrant was issued in October 2021 by the FBI.
The warrant is part of an ongoing investigation by the DOJ, which aims to identify illegal trading activity by short sellers. The primary objective of the Justice Department is to identify whether or not short-sellers are conspiring to bring down the prices of key stocks by sharing vital research and insider information among themselves.
The report outlines that the conspiracy works by the accused sharing key reports before making big moves and purchases, thereby artificially changing the value of the stock.
The DOJ has obtained trading records, hardware and private messages as part of their investigation. The aim is to focus on two trading tactics – spoofing and scalping.
The Punishment Due
Back to the Israeli trades, both traders are allegedly suspected of secretly holding stakes in Muddy Waters, who split their activities to protect the company in the wake of the FBI investigation, and other sources suggest Carson Block backed the two until 2020 and had a stake in their business.
Later it was published on November 2021 that the duo were sentenced to 30 months in prison for role in international insider trading scheme. Dov Malnik pleaded while Tomer Feingold is still a fugitive, according to prosecutors.
Now, the big question is: Will the Fugitive Trader Tip the Authorities on Muddy Waters’ Carson Block for a Reduced Sentence?
