Burford share plunge probed

THE City watchdog is making “wideranging inquiries” after litigation financing company Burford Capital cried foul over alleged “illegal market manipulation” of its shares.

More than £1billion was wiped from Burford’s market value last week after American short-seller Muddy Waters said it was betting against Burford’s shares, accusing it of misleading investors.

Burford branded the attack “false and misleading” and has made regulators and criminal prosecutors aware of its preliminary conclusions following analysis of the trading of its shares last week.

Its chief executive, Christopher Bogart, said: “Burford’s market-leading business today is the same as Burford was a week ago. 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. This is wrong and that is illegal.”

The company claimed that a forensic examination of trading data on August 6, when Muddy Waters tweeted about a forthcoming but unidentified short target, and August 7, the day Muddy Waters launched its critical report, “discloses trading activity consistent with material illegal activity”.

A spokesperson for the Financial Conduct Authority said it had “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 inquiries.”

A second US short seller, Gotham City Research, argued public scrutiny of Burford was “long overdue” and said it should use the controversy as an opportunity to “improve its disclosures and governance”.

Muddy Waters said: “We posted an innocuous tweet the day prior to publishing our report.We were very surprised by the share price fall, so felt we had to derisk our position given how significant a proportion of our fund it was until we fully understood what was happening. This is entirely normal and there is no market manipulation.”

Burford shares fell 95p to 755p.