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Burford names new CFO and governance shake-up amid activist investor row

Litigation funder Burford Capital has appointed a new CFO and begun a search for two new independent directors to its board as its protracted and increasingly public row with US investor Muddy Waters rages on.

Burford confirmed today (15 August) that Jim Kilman will become the company’s new CFO, replacing Elizabeth O’Connell, who is married to its chief executive Christopher Bogart. The personal relationship between the two was a key point Muddy Waters raised earlier this month in a stinging critique of the funder’s governance and accounting standards.

Prior to the statement, Burford’s chief investment officer Jon Molot told Legal Business: ‘We’re pushing the business as we always do, noises in the market don’t distract the team.’

Once the new directors are in place one of Burford’s current four directors, David Lowe, will leave at the company’s next annual general meeting (AGM), to be followed by director Sir Peter Middleton at the following AGM in 2021.

In its statement, Burford said: ‘We anticipate further evolution of the board but the specifics of that evolution are bound up with the ultimate destination and its governance rules, and we will report further on the next step in board evolution as appropriate.’

The shake-up of Burford’s governance will be regarded as a means to strengthen the AIM-listed firm’s position with the investment community. The AIM-listed company’s share price fell sharply on the day Muddy Waters published its critical briefing note on 7 August, though it regained much of its value in subsequent days. Burford also announced it will be pursuing a second listing on either Nasdaq or the NYSE, with investors concerned around the litigation funder being solely listed on AIM.

Earlier this week, Burford confirmed it had approached Freshfields Bruckhaus Deringer, Quinn Emanuel Urquhart & Sullivan and Morrison & Foerster to pursue claims of illegal market manipulation by Muddy Waters. Later, fellow activist investor Gotham City Research added pressure to Burford by suggesting the company was ‘inappropriately financed’.

In response to the governance changes, Muddy Waters founder Carson Block said in a statement: ‘The notion that appointing Mr Kilman as CFO will substantively improve governance is a farce. It is clear from this that Burford is more interested in imposing fig leaves than real guardrails.’

The increasingly acrimonious dispute between Muddy Waters and Burford as one of Europe’s largest litigation funders has generated a debate on the role and standards of the newly-emerged sector, which has exploded in recent years. It is clear that this latest exchange is far from the end of the matter.