James Middleweek, the analyst sacked by Collins Stewart for allegedly trying to blackmail his former employer, has accused its chief executive, Terry Smith, of being obsessed with driving revenues irrespective of the quality of business being offloaded on to clients.
In a wide-ranging attack on the culture of the company under Mr Smith, Mr Middleweek has alleged that there was "a gradual deterioration in the standards of the firm" following its flotation in October 2000 and the appointment of Mr Smith as chief executive just beforehand.
Collins Stewart strongly denies the allegations, and has hired Clifford Chance to investigate the charges raised by Mr Middleweek. A spokesperson for the law firm said: "There was not evidence in the findings to support the allegations."
Mr Middleweek was sacked by the brokerage on 9 July for "gross misconduct" after he allegedly tried to get Collins Stewart to pay him £2.4m if he did not send a potentially very damaging report about the company to the Financial Services Authority.
The document, which has now been sent by Mr Middleweek and the company itself to the City watchdog, details a series of allegations about insider dealing, biased research and ramping of Collin Stewart's own share price.
The highly charged report alleges that the company's management had a "malign influence" on its staff and displayed "a lack of professional integrity".
Under Mr Smith, Collins Stewart's management carried out a number of actions "whose prime purpose appears to have been profiting the company and supporting its share price at the expense of our institutional and private clients", the report alleges.
Examples cited of wrong-doing in the eyes of Mr Middleweek include allegations that the company leaked details of its acquisition of rival brokerage Tullett and over-valued Milestone, a small media company it floated on the junior AIM market.
Milestone yesterday put out a statement saying it was "surprised and concerned" at the effect of the allegations on its own share price, which was yesterday down 20 per cent at 61.5p.
The allegations have also hit Collins Stewart's shares, which closed down 10p to 417.5p. The company has lost 15 per cent of its value so far this week.
Collins Stewart also hit back against its former employee, saying it was planning to ask the FSA to investigate his sale of shares in the company just after he was sacked.
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