Record Damages Claim Against FT Dismissed

by Robin Pilgrim, LawAndTax-News.com, London

22 October 2004

Ruling in the UK's High Court on Wednesday, Mr Justice Tugendhat dismissed the £230 million special damages claims brought against the Financial Times by Collins Stewart, explaining that if such a large claim were allowed to proceed, it would render the libel action brought by the latter "untriable and a waste of the resources of the court".

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 has 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 is arguing 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.

Despite the dismissal of the special damages claim, Collins Stewart has confirmed its intention to press ahead with its libel case against the business daily, and is reported to be seeking £37 million in general damages, which according to the brokerage represents the lost business and profits suffered as a result of the FT report.

Welcoming the High Court decision in a statement released this week, editor of the Financial Times, Andrew Gowers nevertheless observed that:

"It would be a very dark day for journalism and for a free press if publishers were to be held liable for a drop in share price following publication of an article reporting on company events."

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