‘Bizarre’ Muddy Waters report by ex-spies claims Burford Capital management lied

Aggressive short seller Muddy Waters stunned the City today by publishing a report put together by ex-CIA operatives claiming that Burford Capital’s management had repeatedly lied to its investors.

The explosive study details Burford management’s comments since the hedge fund began its attack on the litigation financier last week. It claims that the top brass had been deliberately “evasive and aggressive” in failing to answer questions over its accounting practices and governance.

North Carolina-based Qverity, hired by Muddy Waters to write the report, said: “Evasion behaviour consists of linguistic acts of concealment. Aggression behaviour is typically used by a deceptive person to psychologically influence and pressure the questioner or source of an allegation to either back off or rethink their strategy.”

Seasoned City analysts and brokers appeared unsure how to react to the unusual report. Ben Williams, analyst at Liberum which is a broker to Burford, said: “I’ve never seen anything like this. I suppose in many ways this is a standard short attack, first put out a report then some videos followed by a confirmation of the findings.”

One trader added: “Utterly bizarre. In all my time in the City I’ve never heard of it. Utter b*llshit behavioural analysis pretending be so-called science. I have no idea if any of this is true or not.”

A Burford spokesman said: “We have no response to this whatsoever.”

The report was put together before Burford yesterday announced sweeping changes to its structure.

The firm will remove its boss’s wife from the post of chief financial officer, while its City grandee chairman Sir Peter Middleton is also leaving in May 2021, along with another director.

Investors questioned whether Elizabeth O’Connell, who is married to Burford’s chief executive Chris Bogart, had the independence to run the finance department. She is now chief strategy officer, and former Morgan Stanley investment banker Jim Kilman will take her place. Burford is also looking to hire two new independent directors.