Monday 12 August 2019 10:06 am

Financial Conduct Authority looking into Muddy Waters short attack on Burford Capital

The Financial Conduct Authority (FCA) has said it is making “wide-ranging enquiries” into the circumstances surrounding the publication of a shortselling report on Burford Capital by Muddy Waters. 

US shortseller Muddy Waters launched a short attack on the litigation finance company last week, tweeting that it would shortly be announcing a new short position before publishing a scathing report that criticised the company’s management and accounting practices.

Burford said earlier today that it had identified evidence consistent with “illegal market manipulation” of its shares prior to the attack. 

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

In response, the financial regulator said it “has been aware of these matters since the first tweet and price movements on Tuesday of last week and at that point we began undertaking wide-ranging enquiries.”

“We will continue to make enquiries using the wide range of data and resources at our disposal,” the FCA added.

Following the FCA's announcement, a Burford spokesperson told City A.M. that it "will refer any further evidence it believes to be indicative of manipulation to the appropriate prosecutorial authorities".

Muddy Waters hit back at Burford’s claims it had identified evidence of market manipulation this morning, issuing a statement saying: “The only manipulation is that of Burford’s return metrics, accounts, and disclosures.”

Burford’s shares dropped 20 per cent on 6 August, the day Muddy Waters tweeted about an upcoming short attack, and then plunged 47 per cent the following day. 

The company’s shares were down 8.59 per cent in morning trading to 777p, compared to 850p at Friday’s close.

Main image credit: Getty.