FT Settles Libel Dispute With Collins Stewart

by Robin Pilgrim, LawAndTax-News.com, London

19 January 2006

It emerged earlier this week that the two-and-a-half year libel dispute between stockbroker Collins Stewart and the Financial Times has been resolved, just hours before the matter was due to be heard.

The controversy began in 2003 when, in a 32-page report submitted to the UK's Financial Services Authority (FSA), former Collins Stewart employee James Middleweek alleged that pressure was exerted on analysts to force them to support the firm's corporate finance business by issuing favourable analyses of share issues of sometimes dubious quality. The Financial Times argued that it was within its rights to publish Mr Middleweek's allegations, as they were contained in a document which was in the public domain.

However, Collins Stewart countered that the article in question was libellous, and that by reporting and giving credibility to the accusations, the FT was instrumental in significantly reducing the brokerage's share price.

An initial claim for more than GBP250 million in damages was dismissed in October 2004, following which the brokerage reduced its claim to GBP37 million in general damages, which, it argued, represented the lost business and profits suffered as a result of the FT report.

Under the terms of the settlement reached this week, the Financial Times has agreed to pay Collins Stewart GBP300,000 in damages, and to pay the brokerage's legal costs of GBP2.2 million, in addition to its own costs, estimated to be around GBP2 million.

In addition, the business daily agreed to print an apology to the firm on the front page of Tuesday's 'Companies and Markets' section. The statement read:

"The Financial Times regrets the way in which it reported the allegations made against Collins Stewart in August 2003 by Collins Stewart’s former employee James Middleweek.

The Financial Times is happy to clarify that it did not ever endorse Mr Middleweek’s allegations and it apologises for any impression to the contrary that may unintentionally have been given.

The Financial Times has agreed to pay substantial damages and legal costs to Collins Stewart."

Both sides have welcomed the resolution of the long-running dispute.

Recommended