Client defections deal blow to Collins Stewart

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The Independent Online

Collins Stewart, the stockbroker accused by its former employee James Middleweek of market abuse, has recently seen a series of clients desert it for rival brokers.

They include Numerica, the accountancy firm placed in the spotlight by the high-profile spat because Mr Middleweek said his bosses at Collins Stewart barred him from issuing a downgrade note on the company when he was its analyst.

Numerica switched to Numis earlier this week. Collins Stewart has also been dropped by Mice Group, the business exhibitions organiser which has moved to Investec, and GW Pharmaceuticals, which has hired ABN.

The departures will be a blow to Collins Stewart, which is run by the City veteran Terry Smith. Mr Smith has fought hard to refute allegations by Mr Middleweek and to shore up the broker's reputation in the City, organising in the past few months several high-profile deals, such as the flotation of Center Parcs.

Yesterday the company denied its protracted row with Mr Middleweek had prompted the companies to move. "It is the nature of the business," a spokesperson said. He added that the broker had raised £700m for clients in last year's tough market conditions, which was "testimony" to its ability to place new issues in the City.

Collins Stewart saw more than £200m wiped off the value of its shares after the details of Mr Middleweek's allegations emerged last August in a dossier he sent to the Financial Services Authority.

Mr Middleweek is suing Collins Stewart for wrongful dismissal after he was sacked in July for "gross misconduct".

The companies that have deserted Collins Stewart in recent weeks said their move had not been prompted by the picture painted by Mr Middleweek about how the broker allegedly operates.