Monday 12 August 2019 8:44 am

Burford Capital alleges ‘market manipulation’ ahead of Muddy Waters short attack

Burford Capital said it has identified evidence consistent with “illegal market manipulation” of its shares in the run up to a short attack on the company by Muddy Waters.

The litigation finance company said it had analysed trading data from the 6 and 7 August with the help of a market manipulation expert, and had found evidence of “trading activity consistent with material illegal activity.”

US-based shortseller Muddy Waters had tweeted an announcement that it would launch a new short attack on 6 August, before releasing a report the following day criticising Burford’s management and accounting practices.

Read more: Shortseller Gotham City piles pressure on under-fire Burford Capital with further criticism

Burford said it is continuing to analyse the data and is “considering its own options”, adding that it “has made regulatory authorities and criminal prosecutors aware of these preliminary conclusions”.

Muddy Waters, which is run by veteran shortseller Carson Block, hit back at Burford following its announcement. “The only manipulation is that of Burford’s return metrics, accounts, and disclosures,” said a spokesperson.

“Burford’s market-leading business today is the same as Burford was a week ago,” said its chief executive officer, Christopher Bogart. 

“What has changed is that a substantial amount of market value was wiped out by activity we believe is consistent with illegal market manipulation that has nothing to do with Burford’s business. That is wrong and that is illegal,” he added.

The London-listed company also announced this morning that its chief investment officer, Jonathan Molot, had purchased additional Burford shares for the second time since last week’s short attack. Molot now owns 4.23 per cent of the company. 

Three other Burford executives have also purchased additional shares over the past week, including its chief executive and deputy chairman.