Troubled IG Index sacks its broker

IG Index, a spread betting firm that has had a rough ride on the stock market, has sacked its broker and financial adviser Investec Henderson Crosthwaite. Collins Stewart has been appointed in its place.

The move follows two profits warnings by IG in six months. IG's shares have also ricocheted from their flotation price of 240p to a peak in September last year of 651p. They closed yesterday unchanged at 196.5p.

Investec floated IG and has advised it on difficult issues, such as what to do when the City put pressure on Stuart Wheeler, founder of the betting business, to stand down.

Mr Wheeler did step down from his executive role three months ago but remains as non-executive chairman and retains a 30 per cent holding in the company.

IG stressed that it is not terminating Investec's contract over advice it has given or for the way it handled the profits warnings. "No company likes to issue a profits warning but it is no reflection on Investec," a spokesman said.

He said the reason for the change was because it was "difficult for a broker to be enthusiastic about a share which is trading just below £2 when it has reached £6."

He added: "It is no criticism of Investec, we are just being realistic." Investec could not be reached for a comment.

Mr Wheeler, famed for his record-breaking £5m donation to the Conservative party in last year's general election, founded the business 27 years ago.

The 67-year-old entrepenuer handed over the reigns at the business to his 44-year-old deputy, Nat le Roux, who has been with the company for nine years and was responsible for introducing betting on individual share prices, which formed the basis of IG's growth in the late Nineties.

IG Index originally took bets on the price of gold. It then added bets on commodities, stock market indices and individual shares as well as sports results. When it floated on the stock market in July 2000, valued at £125m.