A stinging profits warning from the accountancy services company Numerica yesterday could be seen to help the case of James Middleweek, the former analyst at Collins Stewart now embroiled in a bitter lawsuit with the company for wrongful dismissal.
Mr Middleweek was the analyst covering Numerica while working at Collins Stewart. He alleges that he was pressured by brokers at Collins Stewart whose clients had invested in the stock not to write negative things about Numerica.
Numerica said yesterday that its business environment remained "challenging" and that economic conditions had not improved. It anticipated making a small loss for the six months to the end of September after spending £200,000 on redundancy costs. This will mean that Numerica's full-year profits will be lower than last year's.
Mr Middleweek had concerns that Numerica was facing problems in 2002 and wanted to downgrade his rating on the stock, believing it was overpriced. He claims in both his writ against Collins Stewart and in a report submitted to the Financial Services Authority that he was told by other employees in Collins Stewart not to downgrade his rating on Numerica. When he did, he alleges, he was asked not to put his downgrade in writing.
He was eventually removed from covering Numerica, as well as the Millfield Group, alleging that he was told he was being too "even-handed" with his coverage of the companies.
Mr Middleweek declined to comment on the situation yesterday, but legal sources believe the profits warning from Numerica adds weight to his allegation.
Collins Stewart, publishing its first-half results on Monday, said that all the allegations made against it by Mr Middleweek were "ill-founded" and made by an individual "whose credibility and motivation are highly questionable".
The FSA is investigating the report on Collins Stewart as an urgent matter, as it also details allegations of insider dealing and share ramping within the company. Numerica said that despite the problems it was facing, it was making progress in cutting costs and was still confident about its future. Its directors were forced to reduce their salaries to reflect the poor results of the company.
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