Top banks step back from AIM

Move coincides with Stock Exchange review of alternative market's advisers

BZW, one of the few blue-chip merchant banks advising on the Alternative Investment Market, has withdrawn from its role as sponsor to AIM flotations in a new blow to the embattled fledgling market.

UBS, the second large bank frequently cited to give an imprimatur of quality to AIM, also said it was not pursuing AIM business actively.

The moves comes as the Stock Exchange starts a review of the suitability of AIM's nominated advisers, who are charged with advising on flotation and making checks on the company and its directors before admission.

The review itself coincides with controversy centering on Gerrard Vivian Gray, the boutique City broker that has floated five AIM companies so far. Of these, two have faced censure for failure to report price-sensitive information.

Another company advised by Gerrard Vivian Gray, Skynet, pulled out of its planned AIM float last week after the Securities and Futures Authority (SFA) confirmed it was looking into the company's share dealings on Ofex, the unregulated share market. Instead, Skynet raised an estimated pounds 3m over the weekend through private investors.

As revealed in last week's Independent on Sunday, Gerrard Vivian Gray is expected to be the subject of disciplinary action by the Stock Exchange as a result of omissions in the admission document for Optical Care (Bermuda) Ltd. Last month Optical Care's chairman, Rupert Galliers-Pratt, accepted a public rebuke from the Exchange for failing to include his 17 former directorships of failed companies. Last week, the company said it was "considering its position" as a nominated adviser.

BZW, meanwhile, says it will keep its nominated adviser rights, but will not be active in the market. Corporate finance director Jeremy Mead played down speculation that it was concerned about its reputation being tarnished by its association with AIM. "It's just not the type of business we are pursuing at the moment," he said.

Simon Thorpe, head of corporate finance for small companies at UBS, said his firm was taking a "toe in the water" attitude to the market and not steering any new companies towards AIM at the moment.

Open criticism was levelled last week by some of the other bigger names at the way in which companies are brought to market. "There are some advisers who are cutting corners so they can offer low fees," said Mark Speller, partner at Coopers & Lybrand Corporate Finance, which has sponsored three AIM floats.

Neill Clerk Capital, which has brought 25 companies to AIM, dismissed the criticism as "sour grapes". "Our belief is we can never do too much due diligence," said Jane Waddell, a director of corporate finance at Neill Clerk.

Another nominated adviser blamed the Stock Exchange for not giving advisers enough guidance over the interpretation of AIM rules. "When we see the fundamental gaps in knowledge that some of the advisers have allowed through, it's shocking," said its corporate finance head, who declined to be named.

AIM's head of regulation, Simon Brickles, said he had not heard complaints from any adviser about standards or about support from the AIM team at the Stock Exchange. "If the kitchen's too hot, they know what to do," he said.

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