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On 15 May 2020 the Commercial Court (Andrew Baker J) handed down judgment in Burford v London Stock Exchange, a landmark decision in both the area of financial services regulation and the Norwich Pharmacal jurisdiction.

Burford’s shares are quoted on London Stock Exchange’s AIM market. On 6 and 7 August 2019 Burford’s shares were the subject of a (lawful) short-selling attack by Muddy Waters, a US investment advisory business, and across the relevant period its share price collapsed. Burford alleged that the price had collapsed not only because of the short attack, but also because its share price had been artificially depressed by unlawful market manipulation, and in particular “spoofing” and “layering”. By contrast, London Stock Exchange and the FCA had both independently analysed trading across the relevant period and had concluded, contrary to Burford’s allegations, that in fact there was no evidence at all of any market manipulation. 

Market participants trade on AIM anonymously. Burford was in possession of public information relating to trading in its shares across the relevant period. It sought Norwich Pharmacal relief from London Stock Exchange disclosing the identities of those trading in its securities so that it could further analyse the data, and (amongst other reasons) bring claims against any wrongdoers. The order (if granted) would have been unprecedented in the context of EU financial markets and (London Stock Exchange maintained) had the potential to damage the legitimate interests of innocent market participants.

Burford’s claim failed. After a review of detailed evidence, the Court found that in fact there was no good reason to suppose that any market manipulation had occurred; and that even if Burford had established a good arguable case of market manipulation, the Court would in its discretion have refused to grant the relief sought. Amongst the Court’s important conclusions, it held:

(1) While its shareholders may have been able to claim against manipulators, Burford itself had no cause of action to pursue against any alleged wrongdoer. In particular, there was no private law right of action (or “euro-tort” of the kind recognised in Munoz v Frumar [2003] Ch 328) under the Market Abuse Regulation.

(2) The FCA had thoroughly investigated the allegations and concluded that no wrongdoing had taken place. Assuming (without deciding in Burford’s favour) that a Norwich Pharmacal order could be sought by a party with no civil claim in order to address criminal wrongs, in this case the strong public interest in the vindication of victims of wrongdoing would not provide any or any substantial weight to the claim that justice required the disclosure of participant identities. 

(3) On the contrary, the order would inevitably result in the disclosure of the valuable confidential information of innocent third parties. 

Andrew Green QC, Thomas de la Mare QC and Harry Adamson acted for the Defendant.

A copy of the judgment can be found here

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