Collins accused of propping prices

THE shares of at least three Alternative Investment Market-listed companies advised by Collins Stewart, the broker at the centre of allegations of impropriety, are 'being maintained at artificially high prices', according to documents being examined by the Financial Services Authority.

Shares in Millfield Group, Numerica and Epic Brand Investments were all being artificially propped up, according to James Middleweek, the sacked Collins analyst who has accused his former employer of a string of failings and is accused by Collins of attempted blackmail.

The allegation - denied by Collins - is especially sensitive because another Collins client company named by Middleweek saw its shares plunge yesterday. Milestone, a radio stations group which Middleweek argued was seriously overvalued, slumped by 21%.

Middleweek accused his Collins salesmen Paul Hodges and Jimmy Durkin of doing 'everything possible to maintain share prices of companies in which their clients are involved, including withholding information and removing the analyst if he does not toe their line'.

They had been 'totally unethical' in interfering to prevent him downgrading Numerica late last year, he wrote in a damning report on Collins sent to the FSA.

The dossier also forms part of a High Court claim for wrongful dismissal. 'It is my overall contention that stocks such as Millfield, Numerica and Epic are being maintained at artificially high prices by Paul Hodges and Jimmy Durkin.'

But Collins, which sent the report to the FSA alleging it was being blackmailed, argues that in the Numerica case, Middleweek was persuaded against downgrading and that the more positive view of Hodges and Durkin 'turned out to be correct'.

The firm had hired lawyers Clifford Chance to investigate all Middleweek's allegations and had been cleared.

The price of Epic, which raised £50m last year to buy unwanted secondary brands from multinationals, was being held up at a 'false level', Middleweek said.

AIM-listed Millfield, which runs a network of independent financial advisers, raised £16m, last year issuing shares at 136p and a further £9m last month in a placing and open offer at 49 1/2p. The shares are now 60 1/2p.

Numerica is an acquisitive accountancy group which raised £30m on coming to AIM in 2001 through an institutional placing at 100p. Its shares are now 73 1/2p.

Collins shares fell 38 1/2p today to 379p. The firm's value has shrunk by £216m since the affair broke last weekend.