7th Jan 2020 15:22
(Alliance News) - Short seller Muddy Waters Capital LLC Tuesday afternoon responded to Burford Capital Ltd's earlier announcement, believing that none of what the company said has countered its claim that Burford manipulates its performance metrics.
Earlier on Tuesday, the AIM-listed litigation financing firm said it was ready to go through the formal process of seeking a US listing, starting with the submission of a registration statement to the US Securities & Exchange Commission.
Burford will seek a US listing on either the New York Stock Exchange or NASDAQ of its ordinary shares, instead of using an American Depository Receipt structure.
In particular, Burford said it was eligible to list in the US as a "foreign private issuer", a listing status that would allow the company to continue to report its accounts under International Financial Reporting Standards and not move to US Generally Accepted Accounting Principles and quarterly reporting.
"None of what they have said today counters the fact that Burford Capital manipulates its performance metrics and abuses the latitude afforded it under fair value accounting," said Carson Block of short seller Muddy Waters.
Muddy Waters also took issue with how Burford announced the dismissal of a US securities class action against Burford filed in August.
"We would also caution anyone against interpreting the litigation dismissal as affirmation that there is no misleading conduct or wrong-doing at the company. It is nothing more than the reality of the US being overly litigious. Lawsuits get filed and dismissed all the time, which in this case is ironic, given Burford's own contribution to the clogged toilet that is the US court system," Block added.
Muddy Waters in early August took aim at Burford, calling it "a poor business masquerading as a great one" and "arguably insolvent".
On August 6, Muddy Waters tweeted that it would announce a new short position the next day but without disclosing the name of the company it would short. Then, on August 7, Muddy Water tweeted a link to its report on Burford.
Burford's share price fell 19% on August 6 and another 46% on August 7.
Shares in Burford were up 2.4% at 700.50 pence on Tuesday afternoon in London. Before its short selling attack, they traded at 1,539.00p.
By Dayo Laniyan; [email protected]
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