Earlier this year, movements in the company's shares attracted attention before news broke that Martin Landau, the property dealer, was to take a 5 per cent stake. Mr Landau, famed for making pounds 25m on the pounds 314m sale of Imry Merchant Developments in 1989, also became deputy chairman of Development Securities.
On the announcement of Mr Landau's appointment on 11 June, the price of Clayform's shares quickly rose from 14p to 25p, reaching 37p during the following week. Records at the Stock Exchange show that 10,000 shares were sold at 13p on 8 June and another 2,000 at the same price the next day. The day before news of Mr Landau's investment broke, around 2.5 million shares changed hands at prices of 12p to 14p.
Mr Landau's investment was part of a pounds 27m placing and offer that aimed to repair the balance sheet of Clayform, which had been hit by the property slump. The increase in the shares at around that time was thought to reflect investors' confidence in Mr Landau.
Neither the DTI nor Development Securities would comment yesterday.