Middleweek threatens to sue 'The Observer'

James Middleweek, the former analyst at Collins Stewart who has accused the company of insider dealing and biased research, yesterday threatened to sue The Observer newspaper over its coverage of the acrimonious dispute.

The move follows legal action Collins Stewart is taking against the Financial Times, after it published details of Mr Middleweek's highly critical report about the stockbroker.

Mr Middleweek and his lawyer, Dale Langley, have written to Frank Kane, The Observer's City editor. They accuse him of libelling them both in an article on 7 September about a meeting in July at which the stockbroker accused Mr Middleweek of trying to blackmail the company. The Observer also published a transcript of a tape of the meeting, at which Mr Middleweek through his lawyer offered to shelve his report in return for compensation worth £2.4m. The Crown Prosecution Service decided there was no blackmail case to answer.

Mr Middleweek has demanded that The Observer, publishes a retraction and hands over the tape transcripts and notebooks by a deadline of next Friday. Mr Kane denied the libel allegation and said he would protect his sources by refusing to hand over any material.