Hedge fund Muddy Waters has asked the FCA to investigate Woodford-held Burford Capital’s accounting practices.
This comes the day after the litigation finance company called on the watchdog to investigate alleged illegal market manipulation by Muddy Waters.
Buford Capital is dual-headquartered in the UK and the US and has the-second largest holding in Neil Woodford’s suspended Woodford Equity Income Fund.
Muddy Waters published a 25-page report on Burford yesterday after it accused the hedge fund of illegal market manipulation in a stock exchange statement.
It says: “We welcome scrutiny by the FCA on the Burford matter. We believe that management’s conduct has possibly given rise to sanctions claims by the FCA.
“Muddy Waters stands ready to assist the FCA in any inquiry, and as has been the case for the past nine years of our short activism, we have nothing to hide regarding our own actions.”
Burford’s share price fell 19 per cent last week following a tweet from Muddy Waters about a forthcoming attack on an unnamed “potentially insolvent” company, “possibly facing a liquidity crunch”.
Muddy Waters also called the firm’s accounting practices a “fiasco” in the tweet.
The hedge fund published a dooming report criticising Burford’s accounts and management in response which saw shares fall a further 46 per cent.
The FCA says it became aware of the situation early last week and is “undertaking wide-ranging enquiries.”