The U.K.’s Financial Conduct Authority, which investigated trading of
Burford said the report, which precipitated a crash in its share price, was “false and misleading” and called for an investigation into the trading. But the FCA told Burford’s chief executive in March that it had not found any evidence of market manipulation, the company said in the filing.
Burford appeared in a London court Wednesday -- via videoconference -- to force the
The FCA’s “position is that it has not found evidence of market manipulation, but it has not provided details of its analysis,” Burford’s attorney Jasbir Dhillon, said in a filing prepared for the hearing, citing a March 12 letter from the regulator.
“The letter concludes by saying that the FCA had investigated Burford’s allegations but that this investigation did not support any further work on them,” he said.
The company, which funds lawsuits and takes a cut of any recovery, isn’t deterred by the FCA’s findings. Burford told the court that it has “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.
The stock exchange said disclosure of confidential trading data would undermine the orderly conduct of the market. It said in court filings for Wednesday’s hearing that its own investigation found “that there was no market abuse.”
It was up to the FCA to take action if it found evidence, the LSE said in a statement.
Burford said in a separate statement that it had a duty to pursue the case and that it had “no choice but to go to court to obtain the information needed to identify the manipulators.”
The litigation funder has analyzed trading data from the exchange that showed a spike in sell-orders that were then immediately canceled -- a practice known as spoofing, Burford said.
Burford criticized the LSE, saying that that the stock exchange didn’t want to “clamp down on types of trading that it would rather not ask too many questions about.”
“The LSE’s default position is to trust traders to abide by the law,” Dhillon said. “Such a gentlemanly approach is not appropriate in an era of computer-driven strategies capable of executing millions of trades in a day.”
The LSE said the allegations were “wholly unjustified.”
The FCA said in August that it started making “wide-ranging enquiries” following the share price fall. It declined to comment Wednesday.
Carson Block, Muddy Waters’ founder, said that Burford is the one that “is intent on deceiving investors.”
The firm’s allegations of manipulation are based on calculations “that show levels of incompetence so grievous that it is hard to believe their statements aren’t knowing falsehoods,” he said in an email.
(Updates with Carson Block comment in final paragraph.)
--With assistance from
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