Tuesday 27 August 2019 12:58 pm

Muddy Waters accuses Burford Capital of deceiving investors

Shortseller Muddy Waters blasted litigation funder Burford Capital again today, saying the company “is not worthy of an Aim listing, let alone a US one”.

The shortseller’s first attack on Burford earlier this month wiped 40 per cent from the company’s share price.

Today Muddy Waters reiterated its criticism of Burford’s conduct in relation to cases it had funded for pharmaceuticals company Napo against rival firm Salix.

Muddy Waters’ latest report was titled: “Was MW wrong about Napo?” 

Read more: Burford executive accused of exchanging documents for sex tape in lawsuit

Answering its own question the first sentence was: “No. Don’t be silly.”

Muddy Waters had previously said that Burford had “egregiously manipulated” its return on investment for Napo in its 2013 annual report, categorising it as a “win with a significant return when it should have been a loss”.

Burford had said “the claim is simply false” and said another matter resolved first and resulted in an entitlement for Burford which is included in its 2013 reporting.

Muddy Waters said this response “shows just how depraved are Burford’s efforts to conceal adverse results”.

In addition to cases against Salix, Muddy Waters said Burford had also backed Napo in its fight with its licensee Glenmark Pharmaceuticals.

Read more: Burford Capital removes finance chief in response to activist pressure

Muddy Waters said in the Glenmark case it was clear before the end of 2013 the outcome was “completely adverse for Napo”.

It said: “This fact calls into serious question the integrity of Burford’s management in making the statement about crystalising an entitlement in 2013.”

The report said: “Like skilled trial lawyers, Burford stops just short of actually lying. But that is really form over substance, or as we see it, a distinction without a difference. In our view, Burford always intended to deceive investors about its Napo returns and its overall investing prowess.”

Burford has been fighting to limit the damage inflicted by Muddy Waters’ short attack. The US shortseller released a scathing report into Burford earlier this month, calling it “a poor business masquerading as a great one” and criticising aspects of its accounting and corporate governance.

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

Burford has since replaced its finance chief and has said it will seek a US listing in addition to its listing on Aim to allay the concerns of investors.

Burford said it was the victim of market manipulation in connection to the run up to Muddy Waters’ shortseller attack.

The UK’s Financial Conduct Authority and the US Securities and Exchange Commission are both investigating allegations of market manipulation connected to Burford’s share price plunge.

Burford declined to comment.

Picture credit: Getty