US watchdogs receive allegations of manipulation over Burford Capital share price
Allegations of market manipulation surrounding the collapse of litigation funder Burford Capital’s share price have been handed to US watchdogs, according to reports.
Claims of “spoofing activity”, in which a dealer makes a trading order before cancelling it to affect the share price, have been passed on to the Department of Justice and the US Securities and Exchange Commission, the Sunday Times reported today.
The development comes days after the City’s watchdog, the Financial Conduct Authority, said it had started undertaking wide-ranging inquiries following the sharp drop in Burford’s share price, which plunged after short-seller Muddy Waters criticised its accounting methods.
The activist shortseller criticised its use of fair value accounting, where unrealised gains are included in its books, and also attacked its governance structure and its listing on London’s junior Aim market.
Burford declined to comment today, but the under-fire firm has previously said that its shares have been “illegally” manipulated” and that traders had cancelled orders in order to deliberately depress the share price.
Last week Burford said that it was replacing its chairman and finance chief in its latest bid to appease shareholders.
Burford said its chief finance officer Elizabeth O’Connell will be replaced by Jim Kilman, formerly vice chairman of Morgan Stanley Investment Banking, with immediate effect.
Muddy Waters boss Carson Block said: “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 guard rails.
“We note Mr Kilman was Burford’s principal investment banker at Morgan Stanley. Burford investors would be much better served by a CFO from the outside who is untainted by Burford’s conduct to date.”