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Burford Capital to overhaul board and seek US listing as it fights back against US hedge fund allegations

Last week, notorious US short-seller Muddy Waters accused Burford of “Enron-esque mark-to-model accounting” and “egregiously misrepresenting” its returns

Burford Capital Limited -
Burford's chairman is quitting in a bid to calm the storm

Burford Capital PLC (LON:BUR) is to overhaul its board in a bid to appease investors after it was accused of poor corporate governance and ‘Enron-esque’ accounting practices by a US hedge fund.

The AIM company, which funds lawsuits in exchange for a cut of the settlements, confirmed late on Thursday it is replacing both its chairman and finance chief.

Burford has faced criticism over the fact that its chief financial officer, Elizabeth O’Connell, is the wife of chief executive Christopher Bogart.

READ: Burford Capital adamant recent share price plunge down to 'illegal market manipulation'

San Francisco-based hedge fund Muddy Waters had warned that the pair’s relationship posed a conflict of interest and should concern investors.

“Concern has been raised about the fact that Burford’s CEO and chief financial officer are married,” said Burford in a statement.

“We believe that concern is unjustified given Burford’s control structure and ignores Burford’s finance and accounting structure. Nevertheless it is clear that investors would prefer an alternative CFO.”

O’Connell, who has been in the job for two years, has been replaced by former investment banker Jim Kilman. She will now serve as the company’s chief strategy officer – a lesser-ranked role.

Chairman to go as well, US listing

Burford confirmed it is also searching for two new directors, one of whom would replace chairman Sir Peter Middleton.

Middleton, who was once a heavy-hitter at Barclays, has been the company’s chairman for the past ten years – more than the nine-year limit that the UK corporate governance code suggest.

In addition to the board changes, the litigation funder also revealed it is seeking a secondary stock market listing in the US, either on the New York Stock Exchange or on the Nasdaq.

One of Muddy Waters’ criticisms was that Burford had managed to avoid broader disclosure requirements by staying listed on London’s junior market.

“Companies are owned by their shareholders, and when the shareholders speak, it is the role of boards and management to listen,” said chairman Middleton.

“While we may take a different view on some of these points, shareholders have clearly spoken and we have listened, just as Burford has throughout its existence.

“We trust that these governance enhancements operate to bolster investor confidence in Burford as it enters its next era of growth and success.”

Quick facts: Burford Capital Limited

Price: 566.8 GBX

Market: LSE
Market Cap: £1.24 billion

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