Former executives sue Alpha Omikron

Alpha Omikron, which was suspended from the Alternative Investment Market last week, is being sued by former executives following the controversial collapse of its UK medical division.

The news is the latest blow for Alpha, as investors face being left high and dry after the resignation of Henderson Crosthwaite, its nominated adviser, last month.

The shares were suspended at just 0.5p on Monday, and dealings are under review by regulators as part of an investigation into an alleged insider trading ring.

Unless the company finds a replacement adviser within the next three weeks, it will be kicked out completely, making it the second of AIM's 260 firms to suffer such a fate.

Alpha has yet to explain the collapse of Medical Underwriting Services Ltd (MUSL), its provider of medical information to insurers that was based in Haywards Heath.

The company announced on February 21, less than a fortnight after Henderson's resignation, that it had dismissed MUSL's chief, Robert Bradshaw.

Former staff, however, say Mr Bradshaw was fired in January and that the company was closed down on February 14 with debts of around pounds 250,000.

The firm had always been loss-making and was sold to Alpha by Stephen Bamford, a former fund manager at US insurance giant Metropolitan Life, who pumped money into many of the same speculative stocks as fallen Morgan Grenfell star, Peter Young.

In a bizarre set-up, which raises concerns about disclosure on AIM, MUSL's ex-company secretary is still holding the keys to the company's headquarters while its ownership and a dispute about redundancy pay is resolved.

Alan Morgan Moodie, MUSL's former managing director, is now suing Alpha for breach of contract.

Mr Bradshaw is also understood to be suing the group.

Another AIM company, Greenhills, which shared directors with Alpha, went into receivership in December - two weeks before it announced the event to the Stock Exchange.