Collins Stewart Files Lawsuit Against Financial Times

by Robin Pilgrim, LawAndTax-News.com, London

09 September 2003

The Financial Times has vowed to fight a lawsuit brought against it by Collins Stewart Tullett PLC with regard to several articles viewed by the brokerage firm as defamatory.

In a letter to the business daily dated August 31, Schillings, the law firm representing Collins Stewart alleged that in the reports in question, which were branded a 'hatchet job', the FT suggested that the brokerage's due diligence procedures on new equity issues left much to be desired, and that so-called 'Chinese walls' were not put in place between the research and trading arms of the firm.

Collins Stewart's lawyers also took issue with the assertion that the FT's source, James Middleweek was fired because his research was too 'even-handed', suggesting that he 'had his own axe to grind as a disgruntled employee sacked for gross misconduct'.

In a 32-page report submitted to the UK's Financial Services Authority (FSA), Mr Middleweek had alleged that pressure was exerted on Collins Stewart analysts to force them to support the firm's corporate finance business by issuing favourable analyses of share issues of sometimes dubious quality.

Schillings argued that by publishing articles supporting several of Mr Middleweek's assertions, the FT lent credibility to them, a factor which directly contributed to a significant loss in market capitalization for Collins Stewart. Referring to one of the articles in question, the law firm announced that:

''The allegations contained in the article of 27th August 2003 are untrue, defamatory, and have been the direct cause of our client suffering enormous loss and damage to its reputation. It has also been responsible for many millions of pounds being wiped off Collins Stewart's market valuation. It could not possibly be described as balanced and responsible. You had no legitimate reason for publishing these allegations.'

However, speaking to the Associated Press this week, Financial Times spokeswoman, Joanna Manning-Cooper revealed that the matter was now 'in the hands of the lawyers', explaining that: 'We stand by our story. We believe there was public interest in reporting those allegations in a balanced way.'

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