View from City Road: Telegraph gets itself blackballed

It is hard to recall the last time Cazenove, Britain's pre-eminent corporate broker, publicly resigned an account. True, in contested takeover bids like the Enterprise one where it finds itself on both sides of the wire, the firm has traditionally done the gentlemanly thing and withdrawn.

On other occasions it has just quietly disappeared; few realise there has been a change at all until a rival broker's name appears on the documentation. But publicly to resign . . . no, not even those who work for the firm can remember the last time.

No doubt Conrad Black, chairman of the Telegraph, will make light of it, as he always does. If true to form, he will regard what has happened as the posturing of pygmies, a pathetic gesture by intellectually inferior beings incapable of understanding his grand design or their place in it. Underneath it all, however, he is said to have been considerably chastened by the experiences of the past week.

Cazenove resigned because it felt it had in some way been misled by Mr Black and his Hollinger master company when it placed on their behalf some pounds 73m worth of Telegraph shares.

Cazenove's placing power in the market is often attributed to its ability to deliver favours. Institutions that help with the dogs get a fair share of the goodies, it is always assumed. No doubt this is true, but it is also the case that Cazenove's coveted position has been won by being scrupulously honest and open with the information it gives to investors.

In this case Cazenove was not able to put all the facts before its clients in the way it would normally expect when doing a placing. It was not able to say that Mr Black might cut the price of his flagship newspaper to 30p if the Times continued to make headway.

Cazenove believed it was deprived of the facts. As a consequence, so were its clients. On top of that, rather than apologising for what had occurred, Mr Black publicly said he didn't care if the firm resigned, and lambasted it for what he called 'inelegant' handling of the placing.

To be criticised as well as misled was too much. Cazenove had no option but to resign. Whether or not Mr Black's decision to go head to head against Rupert Murdoch in a price and circulation war makes any kind of commercial sense - most City observers think it does not - it will be a long time before Mr Black is able to tap the capital markets for money again.