The acrimony between Burford Capital and Muddy Waters has shown no signs of abating, with the litigation funder enlisting Quinn Emanuel Urquhart & Sullivan to chase the identities of traders who allegedly manipulated its shares.
Quinn partner Richard East (pictured) submitted a statement to the High Court on behalf of Burford on Monday (30 September) which argued that the decline in the litigation funder’s share price was the result of ‘unlawful trading activity’. As a result, Quinn formally asked the High Court to obligate the London Stock Exchange (LSE) to reveal the identities of those placing orders and on whose behalf the orders were being placed.
East’s submission added: ‘In the circumstances of this case, there is also good reason to consider that the traders involved in such market manipulation were acting in concert with each other and/or Muddy Waters, thereby also committing the tort of conspiracy to injure by unlawful means.’
However, in a statement US investor Muddy Waters dismissed Burford’s allegations: ‘There are literally dozens of people at our firm, counter parties, and outside accountants who know that when Burford management accuses us of manipulative trading or collusion, they are lying. But given the accounting fantasyland they create, nobody should be surprised.’
Prior to the attack Burford was the most valuable company listed on AIM, the LSE’s junior market, and worth more than £3bn. The broadside by Muddy Waters resulted in approximately £1.7bn being wiped off Burford’s value.
The submission by East also makes reference to a 39-page report by Joshua Mitts, an associate professor at Columbia Law School and the principal of consulting firm M Analytics. According to Mitts, the share price fall ‘was not solely the result of negative market sentiment’ caused by the initial Muddy Waters report.
Meanwhile the ongoing drama has prompted responses from further afield. Andrew Shepherd-Barron, equity research director at stockbroker Peel Hunt, stated: ‘Even if Burford does obtain an official investigation that finds evidence of wrongdoing, the bigger issue is why the share price has not recovered. We think that Muddy Waters had some fair points to make, but not such as to affect materially BURF’s fundamental value. The problem is that whilst Burford has subsequently released some useful information, much more is needed.’
For more detail on the Burford vs Muddy Waters saga, read last month’s news review.