Analyst accused of blackmail

TERRY Smith, chief executive of Collins Stewart, has made a witness statement to City of London police describing in detail how former employee James Middleweek allegedly tried to blackmail the firm.

His version of events is understood to be backed up by statements from in-house lawyer Simon Clark and outside lawyer Seamus Smyth of Carter Lemon Camerons.

All three were present at the July meeting with Dale Langley, Middleweek's solicitor, when the alleged blackmail attempt was made.

Smith claims that Langley, trying to reach a settlement on Middleweek's wrongful dismissal claim, offered on behalf of his client to bury a report containing damaging allegations about Collins Stewart in return for a £2.4m payment to his client. Smith asked Langley to phone his client to confirm his intentions, after which the alleged offer was repeated.

Collins Stewart reported the affair to the police and the Financial Services Authority and has also lodged a complaint about Langley with the Law Society.

Former analyst Middleweek alleges that Smith divulged price sensitive information about the firm, that the firm carried out minimal due diligence on companies it was floating and that he was pressured to reach positive verdicts on client companies.

Collins Stewart emphatically denies all the allegations. Middleweek, who denies blackmail, had no comment. Langley also had no immediate comment.