Burford abandons market manipulation claim

Burford Capital has abandoned a legal bid to prove its share price was illegally manipulated after being denied access to market information.

The embattled litigation funder said it does not intend to appeal a High Court ruling refusing an application to compel the London Stock Exchange to release trading data.

Burford has made a concerted effort to pursue claims for market manipulation following an August 2019 short attack against its shares. The Guernsey-registered and New York-based business came under assault when a US shareholder activist, Muddy Waters, published an apparently damning analysis. Muddy Waters claimed Burford was ‘arguably insolvent’ and described its governance as ‘laughter-inducing’, allegations which were strenuously denied by Burford. Muddy Waters renewed its attack on Burford earlier this week, accusing it of over-stating profits.

Burford retained an expert in market manipulation, Professor Joshua Mitts of Columbia University, to pursue its claims. He found that ‘market manipulation in the form of spoofing and layering caused an artificial decline in Burford’s share price’. However, the court decided this conclusion was merely ‘speculative’.

Sitting in the Commercial Court, Mr Justice Andrew Barker ruled in Burford Capital Ltd v London Stock Exchange Group that it was ‘impossible’ to determine from the data Mitts reviewed whether any share order events were or may have been manipulative.

Refusing Burford’s request that he order the exchange to release participant identity details demanded by the claim, he added: ‘On no view is there a clear case of wrongdoing; and there would be a strong likelihood that Burford would find it could not in fact put forward any actual allegation of wrongdoing at all.’

The court also held that, even if it had not concluded that Mitts’ expert evidence was speculative, it would not have granted relief for other reasons, including ‘a risk of damage to public confidence in the [Financial Conduct Authority] as regulator’.

In a statement Burford described the judgment as ‘flawed’, but said that without the information it had sought the company is ‘unfortunately not in a position to advance shareholder claims further’. It added: ‘There is also a limit to the level of effort that it is sensible and appropriate to expend, and thus Burford does not intend to appeal.’