He Posed As Journal Reporter, Got Caught -- WSJ

By Nick Kostov Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 6, 2017).

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Late last month, Carson Block, the founder of short seller Muddy Waters LLC, accepted an invitation from a man identifying himself as a reporter for The Wall Street Journal.

They were to meet at a chic Manhattan hotel and discuss Mr. Block's short selling of the stock of a French supermarket chain, according to Mr. Block.

The man who showed up wasn't a Journal reporter. According to video footage of the encounter reviewed by The Wall Street Journal and two people who know him, it was Jean-Charles Brisard, a well-known corporate security and intelligence consultant who lives in Switzerland and France.

Mr. Brisard also has regularly worked for Groupe Casino, the French supermarket targeted by Muddy Waters' short selling, the two people said.

The hotel rendezvous offers a peek into the sometimes cloak-and-dagger world of a small but influential circle of short sellers and the companies they target.

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The encounter was described in a lawsuit filed on Oct. 31 in New York by Mr. Block, but Mr. Brisard's involvement and his alleged links to Casino haven't previously been reported.

When first contacted by a reporter about the hotel meeting, Mr. Brisard said: "I am a stranger to these facts. I have absolutely no idea what you're talking about," adding that he had never worked for Casino. Ten minutes later Mr. Brisard called back to say he had been "confused" during the initial call and that he had "no comment" on whether he appeared in the video or had ever worked for the retailer.

On the phone, Mr. Brisard described himself as an "international investigator." His résumé, which is posted on his business website, lists a "business intelligence" stint at media conglomerate Vivendi SA as well as work for the French government, but has no mention of work for Casino. He is regularly quoted in French and international media as a counterterrorism expert.

When asked for comment for this article, a spokeswoman for Casino denied any involvement. She said the company has "never acted in an inappropriate manner" or "authorized anyone to act in an inappropriate manner." Asked whether Casino had any relationship with Mr. Brisard, the spokeswoman said: "We don't have to detail the professional relationships with third parties. It is just business confidentiality."

Mr. Block's Muddy Waters borrows shares and then sells them with the aim of repurchasing them later at a lower price. To that end, the California firm publishes critical research about the company whose shares it is trading and profits if the price declines. Muddy Waters and other short sellers like it disclose in their research they are shorting the stock.

Mr. Block released a report in late 2015 accusing Casino of using accounting gimmicks and financial engineering to inflate its earnings. Its shares dropped 15% after the report was published. Casino denied the allegations, calling them "grossly erroneous" and filed a complaint to the French stock market watchdog at that time.

Mr. Block said he suspected the individual who met him at the hotel of impersonating the Journal reporter. Shortly after the meeting began, Mr. Block whipped out his cellphone and began to film the encounter.

"I'd like to know who you really are," Mr. Block said, according to the video of the encounter. Admitting he didn't work for the Journal, the impostor said: "I wanted to meet you. There is no other way to meet you."

Shortly after, Mr. Block filed a lawsuit in New York trying to compel Google's parent Alphabet Inc. to turn over information related to the identity of the suspected impostor. The person had used Gmail in exchanges with Muddy Waters claiming to be William Horobin, a reporter in the Journal's Paris bureau, according to the lawsuit.

A Muddy Waters spokesman said Mr. Block filed the suit to establish that the impostor was sent by Casino. "Going through with the lawsuit is the first step in proving that [Casino CEO Jean-Charles] Naouri is the ultimate actor here. It means a lot when people swear to the facts under penalty of perjury," the spokesman told the Journal.

"Casino already suffered many calumnious accusations from this company in the past," the Casino spokeswoman said. "We believe these alleged suspicions would just be another attempt to destabilize the group and we vehemently refute and deny any such allegations."

The lawsuit by Muddy Waters stated that the firm responded more than 10 times to the impostor's messages dating back to September last year, though a spokesman said the firm didn't reveal any sensitive information.

"We are told by our bureau in São Paulo that you're about to release a new report on French company Casino," the person wrote in one email exchange, reviewed by the Journal and referred to in the lawsuit. "Do you already have a release date? Could we chat briefly at your best convenience?"

Mr. Brisard declined to comment on whether he was involved in the email correspondence. Google didn't respond to a request for comment.

The Mr. Horobin who is a Journal reporter declined to comment. A spokeswoman for Dow Jones & Co., publisher of the Journal, said: "I can confirm that The Wall Street Journal reporter with this name has made no inquiries" with Muddy Waters.

As Mr. Block planned a fact-finding trip to Paris in January 2017, his assistants began receiving unusual inquiries, according to the lawsuit. One came from a person claiming to work at the French stock market regulator. Another came from someone claiming to be the assistant of a high-profile French banker, seeking details on Mr. Block's Paris schedule.

In the lawsuit, Muddy Waters said it contacted the Journal's Mr. Horobin in February and established that he hadn't been communicating with the firm.

"My thinking at that time was I'd like to somehow use this or flip the script," Mr. Block said in an interview. When the person impersonating Mr. Horobin proposed a meeting, Mr. Block said he took it, with the intention of confronting him.

A spokesman for Muddy Waters said the firm is "exploring all legal remedies going forward, but hard to say exactly what they are at this point." He also said the firm no longer has a short position on Casino.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

November 06, 2017 02:48 ET (07:48 GMT)