Burford Capital adamant last week’s share price plunge was down to ‘illegal market manipulation’
Tom Howard, 12 August 2019
On 6 August alone, Burford reckons almost £90mln of sell orders were placed and cancelled, artificially driving down the value of its shares. Burford Capital Limited (LON:BUR) is adamant that last week’s share price plunge owed more to “illegal market manipulation” than any flaws in its business.
Last week, shares in the litigation funder plunged by more than a third after notorious US short-seller Muddy Waters accused it of “Enron-esque mark-to-model accounting” and “egregiously misrepresenting” its returns.
After rebuffing the accusations, Burford has once again hit back, claiming that a forensic examination of trading data has uncovered evidence of ‘spoofing’ and ‘layering’.
Spoofing is when someone places a big sell order at just below the current offer price, but cancels the order before it is executed. They then repeat this process, which brings down the share price without any shares being sold.
Layering is similar to spoofing, the difference being that traders place sell orders above the current offer price. These are virtually certain not to be executed – who would agree to buy shares for more than the going rate? – but they still affect pricing as they suggest there are lots of shares for sale.
