Premium

Burford shakes up board in wake of Muddy Waters 'short attack'

Wall Street bull
Burford said it was exploring a possible listing in the US

Litigation funder Burford Capital has bowed to pressure and promised to shake up its boardroom in the wake of a blistering ‘bear attack’ on its shares by US short seller Muddy Waters last week.

Burford's chief financial officer Elizabeth O’Connell, who is married to the company’s chief executive Christopher Bogart, will immediately move into the role of chief strategy officer. She will make way for a new number cruncher, Jim Kilman, who will hold the role for no more than two years. 

The firm has kicked off a search for two new independent directors to join the board “as rapidly as possible” and Mr Bogart will also join the board. Chairman Sir Peter Middleton and non-executive David Lowe will step down.

Muddy Waters boss Carson Block called Mr Kilman's appointment "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," said Mr Block.

Mr Block said Burford investors would be "much better served" by a finance chief "from the outside who is untainted by Burford’s conduct to date". 

The company also said it would “endeavour” to list either on the US main market or on the Nasdaq, saying investors had “made it clear” they did not support it remaining solely listed on London’s junior Aim market. Failing that, it may consider a move up to the main market in London.

Burford cited the US market’s “deep liquidity”, as well as potential access to a “broad pool” of investors who are familiar with litigation, as reasons why a listing in America would be “commercially attractive”. 

Analysts at Jefferies said the changes signalled "a greater willingness to act on shareholder concerns, which we think is welcome".

Burford funds costly legal cases in exchange for lucrative returns on future settlements. It came under fire last week when a report by Muddy Waters alleged that it had been “egregiously misrepresenting” its returns. It also attacked its "laughable" corporate governance.

Burford hit back at the allegations, highlighting the report’s “many factual inaccuracies, simple analytical errors and selective use of information and expose its fallacious insinuations”. 

At the time Mr Bogart insisted his relationship with Ms O’Connell - to whom he has been married for 27 years - had been publicly disclosed to investors, telling The Telegraph he did not understand why it was “newsworthy”. 

Shares in Burford Capital rose nearly 13pc by market close in London to 880.5p. They are still 35pc lower than their value before Muddy Waters launched its attack.