Burford Ends Efforts to Investigate Stock Crash After Court Blow

Burford Capital Ltd. ended its efforts to investigate a crash in its share price after a London judge found its stock wasn’t the target of any “unlawful market manipulation.”

The litigation funder lost an attempt to force London Stock Exchange Group Plc to provide the identities of traders who placed orders on its stock over two days last August when the share price fell by around 60%. The plunge took place around a critical report by short seller Muddy Waters.

“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,” Judge Andrew Baker said in his ruling Friday.

The company said it won’t appeal the decision, ending its fightback following the Muddy Waters report last year. The stock is still down 62% since the short seller claimed that Burford manipulated return metrics and misled investors about how it accounts for gains on ongoing litigation.

LSE had highlighted that the U.K.’s Financial Conduct Authority had also found no evidence of market abuse and should be “the competent authority” in conducting investigations.

In its claim, Burford said that there was “compelling evidence” that its stock was manipulated by “unscrupulous traders.” It said that by refusing to disclose identities, the LSE appeared to be reluctant to take any action that would harm its own interests.

But “without the trading data sought by Burford, it is impossible to prove market manipulation,” the company said.

--With assistance from Lisa Pham.

To contact the reporter on this story:
Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story:
Anthony Aarons at aaarons@bloomberg.net

Christopher Elser

© 2020 Bloomberg L.P. All rights reserved. Used with permission.