* Burford shares hit around time of Muddy Waters report
* Burford wants LSE data on those trading in its shares
* Shares in Burford up 3.7% on Monday
(Adds LSE statement, updates shares)
By Simon Jessop
LONDON, Sept 30 (Reuters) - Burford Capital began
legal action on Monday against the London Stock Exchange
seeking trading data it said it needs to investigate alleged
manipulation of its share price.
Burford, a company which specialises in financing
litigation, raised concerns about trading activity on Aug. 12
after a sharp fall in its shares, alleging 'spoofing' and
'layering', where traders make and cancel orders to influence
share prices, and said it was investigating.
London-listed Burford last month commissioned a report from
Columbia University academic and data analyst Joshua Mitts to
assess publicly available market data on its shares.
Burford's lawyer Richard East of Quinn Emanuel Urquhart &
Sullivan, said in court documents that the report by Mitts
showed there were "strong grounds to consider that a large
proportion of the decline in Burford's share price was the
consequence of unlawful trading activity known as 'spoofing' and
'layering'".
"This share price decline coincided with a short selling
attack on Burford's shares carried out by Muddy Waters Capital
LLC," East said in the documents seen by Reuters.
Carson Block, founder of Muddy Waters, denied any
involvement in a statement on Monday.
"Spoofing and layering are issues that have arisen in the
high frequency and computer-driven trading world, and Muddy
Waters has zero capability to engage in these practices," he
said.
Burford said it wants the court to help it discover which
individuals and entities placed the orders, and on behalf of
whom, to help determine what was legitimate trading and what may
have constituted market abuse.
That level of data is commercially sensitive and not
currently in the public domain, hence the need for Burford to
apply for court approval to access the data.
A spokesperson for the LSE said: "The Financial Conduct
Authority is the competent public authority responsible for
investigating allegations of market abuse, where there are
reasonable grounds for doing so and taking action, including
potential criminal proceedings, where the evidence supports it.
"London Stock Exchange provides any information the FCA
requires from it for the purposes of their investigations."
Britain's Financial Conduct Authority (FCA) said on Aug. 12
it was making "wide-ranging enquiries" into the circumstances
surrounding the Muddy Waters report.
The FCA declined to comment on the case on Monday.
After falling 42% from Aug. 6 to the close on Friday,
Burford stock jumped to a session high of 843.5 pence after its
statement on Monday. Its shares closed up 3.7% on Monday.
($1 = 0.8129 pounds)
(Reporting by Simon Jessop;
Editing by Alexander Smith)