Tech firms listing in London? That’s a red flag, says short seller Carson Block

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City Editor

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Carson Block said London should focus its efforts on being the "cleanest" market in the world - but a top City figure has hit back today
Carson Block said London should focus its efforts on being the "cleanest" market in the world - but a top City figure has hit back today

Any tech firm listing in London should raise alarm bells, the short seller Carson Block said today, as he took aim at the City’s “clubby” culture and focus on pedigree.

In an interview with City A.M. published this morning, the chief of activist investment outfit Muddy Waters said the depth of talent and capital was far deeper in the US, and firms that actively avoid it would be worth scrutinising as potential short selling targets.

Muddy Waters is an activist short seller which publishes damning reports on firms and then profits from the plummeting share price. 

“When you see tech companies that are listed outside of the US, it’s almost always a flag,” Block said. 

“The money allocated to tech investing in the US is just massive. And so if you’re not raising money in the US for something that’s tech, the implication is that the people are not that bright. 

“Relative to the talent that you’re gonna get in Europe in tech, the US is going to have the sharper people.”

Block’s comments are likely to irk many in the Square Mile as ministers and officials look to promote London as a hub for tech companies. 

The Chancellor Jeremy Hunt said this week that London could top the Nasdaq in some areas as London Stock Exchange officials push ahead with a number of reforms to try to boost the appeal of the market.

Central to the measures has been a drive to get more pension money flowing into start-ups and the public markets in order to keep firms here.

However, Block claimed the recent Mansion House compact to channel more retirement cash into UK start-ups is also going to be “similar to the SPAC boom in the US”.

“There are going to be so many charlatans who come out of the woodwork and so much money lost,” he said.

He added that London was susceptible to fraud because of the “more clubby atmosphere” than the US.

“The personal relationships and the focus on pedigrees, you know, ‘where did he go to school?’ I think that at times it does make UK investors more susceptible,” he said.