Tipster sued over share losses

FLAMBOYANT former Sunday Times share tipster Paul Kavanagh has been named in a £250,000 High Court writ against Killik & Co, the City brokerage where he he is a director.

The writ alleges that in January 2000 he had control of a portfolio belonging to Richard and Susan Abbott, which included 50,000 shares in The Money Channel, the defunct broadcaster founded by Sixties pop star Adam Faith.

Kavanagh was asked to sell the shares, but the order was not carried out, the writ claims. Richard Abbott, a former Deutsche Morgan Grenfell banker, is now chief executive of Park Row Group, the AIM-listed pensions and investment advisory group that competes in some markets with Killik & Co.

According to legal documents, Richard Abbott called Kavanagh in mid-January 2000 when the shares had risen to more than 500p. Abbott suggested they were overvalued and urged him to sell the holding. The writ alleges that Kavanagh agreed with Abbott's view and said he would have the shares sold.

But the deal was never carried out and Killik & Co has now claimed to the Abbotts that no deal was possible because there was no one willing to buy the shares.

The Abbotts dispute this and maintain that records from the Stock Exchange show it was possible to deal in the shares throughout late January and early February. They are demanding that Killik & Co proves that an attempt was even made to sell their shares. The Abbotts claim that as a result of Killik & Co's failure to sell, they have lost £250,000 and are also claiming interest on that amount.

Kavanagh was a shareholder in The Money Channel and its original backers included Killik's own founders, Matthew Orr and Paul Killik. Killik was chairman of the channel. It started broadcasting in February 2000, but rapidly ran out of money and went into liquidation in May 2001.

The involvement of so many senior figures at Killik in The Money Channel makes any investments on behalf of clients controversial. Killik & Co said that 'on virtually every occasion' the firm wrote about or discussed the stock it was made clear that directors were involved.

Soon after the channel's collapse, Faith said he had tried to build the QE2 but had instead 'built the Titanic'. 'Once my shares were worth £30m, now they're worth nano-technology nothing,' he said. A Killik & Co spokesman said the Abbotts' writ would be contested. 'We can see no merit in this claim,' he said.