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Burford Capital Limited

Burford Capital passes evidence of market manipulation to US regulators

Last week, Burford said it had identified “evidence consistent with illegal market manipulation” including 'spoofing' and 'layering'

SEC headquarters in Washington DC
SEC headquarters in Washington DC

Burford Capital Ltd’s (LON:BUR) claims that its shares have been the victim of market manipulation by short-seller Muddy Waters have been passed to the US financial regulator.

San Francisco-based hedge fund Muddy Waters on Tuesday 6 August tweeted about a “new short position on an accounting fiasco that’s potentially insolvent and possibly facing a liquidity crunch”.

The following day, Muddy Waters published a blog post where it accused the AIM-listed litigation finance specialist of “Enron-esque mark-to-model accounting” and “egregiously misrepresenting” its returns, resulting in Burford’s shares losing around two thirds of their value.

Last week, Burford said it had identified “evidence consistent with illegal market manipulation”, saying that Tuesday had seen 578,112 sell orders placed on its shares at below market value and then cancelled.

Burford said it had also seen signs of 'layering', which involves placing sell orders above the current offer price and can affect pricing as it suggests there are lots of shares for sale.

Evidence has now been handed over to the Securities and Exchange Commission (US) and the Department of Justice (DoJ) of what Burford, the Sunday Times reported.

Burford has since moved finance director Elizabeth O’Connell, wife of chief executive Chris Bogart, to a less senior board role and said it was looking to add two new independent directors to the board as soon as possible, as well as kicking off the process of adding a dual listing on either NASDAQ or the New York Stock Exchange, which would bring greater disclosure and governance requirements.

Burford shares, which fell as low as 380p on Wednesday 7 August but have recovered strongly since, were down 5% on Monday morning to 760.45p.

Quick facts: Burford Capital Limited

Price: £7.77

Market: LSE
Market Cap: £1.7 billion
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